Bloomberg Markets notes that when it comes to offshore hedge fund centers, there’s a new kid on the block.

While many leading domiciles for offshore hedge funds remain in the Caribbean--notably the Cayman Islands, the British Virgin Islands, Bermuda, and the Bahamas--another island is drawing attention, especially from European funds.

Malta--yes, Malta--has quietly leveraged the rising transparency imperative to attract more funds. There was a time when the quaint island sought to play on the traditional terrain, offering anonymity and a “laissez-faire regulatory regime,” not to mention very low taxes, as in no capital gains taxes and no taxes on dividends.

“In the mid-1990s, the country reversed course, bringing its regulations in line with the EU ahead of becoming a member state in 2004. Among other requirements, Malta demands audited quarterly financial statements and background checks for fund owners and directors. Since the early days of the financial crisis, with investors preferring transparency to secrecy, Malta’s regulatory scrutiny and accountability have become selling points,” the article notes.

The number of funds located in Malta had grown to more than 500, up from 165 funds in 2006. Luxembourg and Dublin remain the European leaders. The former has more than 700 hedge funds and funds of hedge funds. In 2010, nine companies from the British Virgin Islands, seven from the Cayman Islands and six from Luxembourg moved to the island.

Malta has a long ways to go before it becomes the next Cayman Islands. I doubt a lot of U.S. funds will make the move, given the proximity to the Caribbean and the fact that Maltese officials are a bit picky. Still, there’s plenty of business to be had from European financial centers.

For more:
- here’s the article

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