Michael Corcelli has seen the growth firsthand as founder and president of the Florida Alternative Investment Association, which started in 2007. "The number of firms in our association has doubled in the last three years" he says. "And so have assets under management."
South Florida is home to more than 200 family offices, almost 20 private equity firms and more than 50 hedge funds, according to the Newlink Group in Miami. Palm Beach County's Business Development Board puts the numbers even higher, with an estimate of more than 300 hedge funds and private equity firms in the three county area. Only three major alternative investment firms have relocated their headquarters offices to South Florida, but the number of satellite offices continues to climb.
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New regulations have also played a part in this influx. According to lawyer Nanette Aguirre of Greenberg Traurig, it all started with the federal Dodd-Frank reforms after the 2008 financial crisis, which made it more expensive for hedge funds to do business. Now, fund managers face compliance with an IRS provision that requires reporting of deferred fees (pre-2009) and related earnings from offshore accounts. Taxes can be a lot lower for fund managers when they are domiciled in Florida instead of New York.
"I do see continuation of a growth market for AIs," says Greenberg Traurig lawyer Bruce Rosetto. "All positive factors will continue for the foreseeable future, and we're seeing foreign investment continue. After all, we're still the safe harbor for the rest of the world."