Do offshore Private Equity fund structures really reduce transparency? Media commentary on Peter Lavery’s recently published research paper, Private Equity Fund Formation and Structure: Evidence from the UK, including a front page article in the FT has seized on its suggestion that rising offshore usage could reduce transparency just as retail investors begin to enter private markets. It’s a compelling headline, but a thin conclusion. Louis Dodd, Head of MLRO at Sonata One, looks beyond the headline.
Offshore is not new
Lavery’s research examines nearly 1,000 UK private equity limited partnerships formed between 2000 and 2025. Offshore usage rises sharply over that period — from around 13% to more than 60% — with Guernsey and Luxembourg featuring prominently.
However, offshore structuring is not new. As the paper points out, parallel partnerships and feeder vehicles have been part of private equity since the 1980s, designed to accommodate different investor types, tax treatments, and regulatory regimes. They exist to make global fundraising work — avoiding double taxation, broadening capital pools, and aligning structures with investor needs and preferences.
Retail-ready fund centres, not loopholes
In jurisdictions such as Guernsey and Luxembourg, offshore does not mean lightly regulated. These are mature fund centres with strong investor protection, robust AML/KYC frameworks, and well-established supervisory regimes. Importantly, both have also positioned themselves deliberately as retail-friendly jurisdictions. Luxembourg’s RAIF and ELTIF regimes, and Guernsey’s streamlined Private Investment Fund framework, are explicitly designed to broaden access while maintaining institutional standards. Moreover, with respect to tax, both of jurisdictions adhere to FATCA and CRS standards, ensuring transparency for tax authorities worldwide. Their growing use reflects trust in those regimes, not a retreat from oversight.
Where transparency can break down
That brings us to the real story in Lavery’s data: complexity. Multi-vehicle, multi-jurisdiction fund structures are now the norm. And as retail participation increases, the pressure shows up where it matters most, in the investor experience.
Transparency across the fund lifecycle can be harder to achieve when reporting is fragmented across multiple systems and providers, performance data is inconsistent and capital accounts are difficult to reconcile. The funds that will succeed, both with retail and institutional investors, are not those that hide behind complexity, but those that simplify it — clearly demonstrating performance and delivering a seamless experience from selection and subscription through to settlement and beyond.
Infrastructure is the real differentiator
This is, at heart, an infrastructure question. For private markets to scale responsibly, investors need a single, connected journey across the fund lifecycle — from selecting an investment, through subscription, settlement and being able to see clearly how their portfolio is performing over time. That is what we’re building towards at Sonata One, a seamless, end-to-end experience for investors, in one platform, underpinned by globally compliant standards and expert human support.
A more constructive conversation
Lavery’s paper usefully surfaces how much private markets have changed over the past two decades. The challenge now is to ensure the infrastructure around them keeps pace. In that context, onshore vs offshore is not the problem to solve — operational coherence is. And that is a far more constructive place for the conversation to land.
