Jersey’s funds industry has continued to perform well against a challenging macro environment but needs to remain agile and place a genuine emphasis on innovation in key areas to meet the competitiveness of an evolving industry, according to speakers at a recent Jersey Funds Association (JFA) Chairman’s Update event.
Held at the Pomme d’Or earlier last month (16 January), the event saw Chairman Michael Johnson discuss the current landscape and set out the organisation’s priorities for 2024, while Vice Chairman Joel Hernandez provided a legal and technical update.
Highlighting the robustness of the Island’s funds sector, Michael pointed to the £525bn net asset value of the sector and the continued success of the Jersey Private Fund (JPF), with 664 JPFs formed since the product was launched, making it the go-to product for sophisticated investors.
He also highlighted that the alternative asset classes now make up 81% of Jersey’s total funds business with private equity and venture capital accounting for the lion’s share.
Meanwhile, private placement continued to prove a popular access route to EU capital through Jersey, with 391 funds now being marketed by 213 fund managers, while the industry is also supporting an increasingly broad geography of managers, from Asia and Africa to the US, highlighting the jurisdiction’s global capabilities.
Commenting, Michael said: “The continued strength of our funds sector is testament to our offering, particularly our stable and no-change proposition when positioned against the wider backdrop of global market uncertainty. 2023 was a difficult year for both managers and investors, but despite that prevailing complex geopolitical and economic picture, Jersey saw a number of significant fund launches and we have a robust pipeline of new funds and managers.
“It remains vital, however, that we stay cognisant of what is an evolving environment whether that be from a regulatory, ESG, technological or geopolitical perspective in order to maintain our attractive ecosystem for alternative funds.”
That message was reinforced by Joel, who highlighted product innovation, including around the tokenisation of assets, as a key focus for the next 12 months. In particular, Joel, who is also head of the legal and technical sub-committee, pointed to the work the JFA was currently doing with the Jersey Financial Services Commission (JFSC) to modernise guidance for funds and special purpose vehicles with exposure to virtual assets.
“It has been another busy year for the legal and technical committee with sizeable collective efforts being undertaken regarding our AML/CFT framework, guidance around virtual assets, a response to what has been coined the ‘retailisation’ of alternatives, and improvements to our successful JPF regime. The coming months are set to be no quieter, but we are fortunate to have a collegiate approach that will ensure Jersey remains competitive based on what it has become known for - cost, speed to market and quality - all underpinned by an innovative mindset.”
At the event, the JFA’s annual dinner was also confirmed to take place on 28 June this year. Further information can be found via the JFA website.
The JFA committee highlighted the strong performance of Jersey's funds sector in 2023, and outlined its priorities for the year ahead at its annual update held recently...
JFA Chair Michael Johnson provides an analysis of the evolution and current state of Jersey's funds sector for the 2023 edition of annual coffee table publication First for Finance...
By Michael Johnson, Chair, Jersey Funds Association
As the global disruption of a pandemic continues to fade in the rear view mirror, new challenges – and opportunities - have come to the fore for Jersey’s funds industry.
Regulatory, economic and geopolitical change are now staples of the environment we operate in, but the good news is that Jersey's funds industry has been able to adapt to such a fast-evolving environment.
Jersey's forward-looking approach, commitment to first class service and focus on creating an ideal ecosystem for alternative investments have enabled its funds sector to thrive over recent years – but increasingly it is the jurisdiction’s ability to be agile and innovate in the face of change that is shaping our future course.
The past year has been another successful and buoyant one for our funds industry.
Figures in early 2023 indicate that the total net asset value of funds under administration in Jersey stood at a record high of more than half a trillion pounds (£523bn), with Jersey private funds continuing to increase year-on-year.
In addition, we are seeing an ever-increasing community of managers fully resident in the island across private equity, hedge fund, venture capital, debt and real estate. These managers provide depth and diversity to Jersey's industry, at a time when substance remains high on the agenda.
Jersey’s expanding and enhanced product range is being warmly received by global managers and investors too.
The Jersey Private Fund regime (JPF) continues to assert its appeal as a fast, cost effective fund vehicle which is ideally suited to a small number of sophisticated institutional investors. More than 600 JPFs have now been established in total – meaning that their number has now overtaken Collective Investment Funds (CIFs) in Jersey for the first time.
Amendments to Jersey’s Limited Partnership law and the long-awaited introduction of the Limited Liability Company (LLC) structure in early 2023 have also bolstered Jersey's options for overseas managers, particularly those in the US.
Jersey’s platform as a gateway to EU investor capital through private placement remains strong too.
With this year marking ten years since AIFMD was implemented across Europe, more than 400 funds and 200 non-EU managers are using the tried and tested National Private Placement Regime (NPPR) through Jersey to access Europe– a figure that has grown by around 60% in five years.
It’s clear that global managers continue to respond positively to Jersey’s private placement option, which holds particular appeal for those who do not require a full onshore EU presence – which is around 97% of managers, according to the EU’s own figures.
As investors continue to navigate a challenging landscape, Jersey’s funds sector is, overall, in a good place, with global trends supporting the future outlook of our industry as investors continue to focus on the opportunities presented through alternatives– private equity, venture capital and real assets - areas where Jersey has particular expertise and experience.
It is, however, prudent that Jersey remains on the front foot, alert to changes in the landscape and ready to respond with agility to market shifts.
At a macro level, for instance, Jersey’s weighting towards alternatives could turn out to be our greatest challenge should the industry adopt a cautious outlook as we cross the rubicon to a higher interest rate environment.
In early 2023, for instance, two-year UK Gilts stood at 5.5% and are expected to surpass 6% in the next year. That’s the benchmark for the risk-free rate – the key hurdle for allocators when determining allocations to portfolios.
Not only that but allocators are also contending with the denominator effect, further impeding their sentiment and ability to continue to allocate so freely to closed-ended alternatives. We cannot ignore some significant sectors that are likely to be impacted – real estate, a key area for Jersey, being one.
In this new era, embracing innovation, being agile and looking at our product range to see how we can introduce a wider choice of products and services will be vital. It’s why this year the JFA has established an innovation sub-committee to look at a range of ideas – such as developing the foundations for holding assets using digital ledgers.
The tokenisation of real assets looks set to have a transformational impact on the cross-border funds industry in the coming years. We are already well engaged on that topic, but it is vital we maintain momentum in an area that is witnessing real acceleration.
We are also well positioned in the rapidly growing arena of ESG investing. Jersey has a clear sustainable finance vision and is making good headway in implementing on that strategy – but as international regulation evolves, it’s vital we keep up with the pace of change.
The MONEYVAL assessment in 2023, meanwhile, has also underlined the importance of asserting our industry’s strength in combatting financial crime and working collectively as an industry and with the government to ensure our national approach is fully aligned with our industry approach.
Jersey's reputational advantage has long been at the heart of our success and as an industry we continue to be alive to the importance of being able to demonstrate the highest standards of anti-money laundering, compliance and governance.
In addition, if we are to maintain our growth trajectory, we need to be able to draw on a sustainable workforce. Experience and expertise have long been Jersey’s hallmarks, and a commitment to sourcing the best talent to boost productivity – in tandem with digital adoption - will be critical in the years ahead.
With that in mind, the JFA remains proactive in attracting both young and diverse talent to the industry and enabling ‘career switchers’ an opportunity to enter the sector.
As we look forward, the ability of our industry to be agile and embrace innovation, balanced against a commitment to remaining a stable and certain domicile, will continue to be at the core of Jersey’s proposition. If we can achieve that balance, then our funds industry can approach the future with confidence.
You can read the full Jersey: First for Finance publication as an e-reader here.
It’s ten years this month since the AIFMD was implemented across the EU. But what has been the impact on the alternatives landscape from Jersey’s perspective of a regulatory framework that was borne out of the 2008 global financial crisis?
It’s ten years this month since the Alternative Investment Fund Managers Directive (AIFMD)was implemented across the EU. But what has been the impact on the alternatives landscape from Jersey’s perspective of a regulatory framework that was borne out of the 2008 global financial crisis and has played a significant role in shaping today’s cross-border funds industry?
When the AIFMD was introduced across EU Member States in 2013, it formed part of a global trend amongst regulatory and political authorities to increase regulation with a view to shore up market stability and protect investors, against the backdrop of the global financial crisis.
In the years leading up to the introduction of the AIFMD, there was a huge amount of industry consultation and debate around what the regulation might mean for cross-border funds and non-EU jurisdictions – debate that to some degree continues today.
A decade ago, there were frequent discussions, for instance, around whether and how non-EU managers would be able to market to EU investors and what that might mean for structuring. For some years, there were whisperings of a ‘passport’ being extended to non-EU third countries based around criteria of equivalence – with Jersey, as a non-EU jurisdiction, being high on the list should that option ever become available.
Ten years on, that passport option has not materialised. What has materialised however, is a Jersey funds sector that is thriving and buoyant, not in spite of the AIFMD but in part because of it.
A large part of this success is due to just how well the National Private Placement Regime (NPPR) has worked in practice – a marketing mechanism whereby alternative funds can be marketed to EU investors based on specific agreements with individual EU Member State authorities.
While ‘onshore’ EU funds are subject to the full scope of the AIFMD, for example, Jersey funds are not. Having to subject a fund to the full scope of the AIFMD rules comes with significant cost, whereas flexibility and speed to market are all advantages enjoyed by utilising NPPRs.
“The private placement approach has been something of a lightning rod for the Jersey funds industry,” explains Michael Johnson, Chair of the JFA. “It’s proven to work extremely effectively, offering quick and easy access to EU capital without the regulatory burden of complying with the AIFMD in its entirety.”
In scenarios where managers are needing blanket access to EU Member States, private placement is not necessarily the right choice. But the fact is that this is rarely the case.
"The reality,” says Elliot Refson, Head of Funds, Jersey Finance, “is that 97% of managers market into only three Member States or less – that’s backed up by figures from the EU Commission. Where that’s the situation, opting to go onshore, therefore, merely adds to ongoing costs and increases the regulatory burden disproportionately.”
The private placement alternative through Jersey, in contrast, is far more flexible and cost effective. This is a message that has resonated well with managers not just with their eye on EU capital but also with a global outlook.
There are currently, for example, more than 200 non-EU managers marketing their funds into the EU through private placement via Jersey – a figure that has grown by around 60% in five years. Specifically, the number of US-originated fund structures serviced through Jersey has grown 61% while the value of fund assets under management has risen by 22%, according to Monterey. It’s an indication of the appeal of Jersey’s platform as a gateway to Europe.
Jersey has accelerated that growth not by sitting back but by introducing complementary structures; half a decade ago we introduced the Jersey Private Fund (JPF) which allows up to 50 investors to establish a fund in under 48hours. Working effectively under private placement rules, it has become a go-to structure so much so that there have been more than 635 formed.
More recently, the jurisdiction introduced its own Limited Liability Company (LLC) legislation modelled on regimes in Delaware and Cayman - which offers its own legal personality and the option of attaching body corporate status - providing familiarity and certainty for US and other global fund managers. Again, the LLC works well with private placement criteria for managers wanting to target EU capital.
“It is this willingness to innovate, to stare down challenges and grasp opportunities that has led to Jersey’s position today where we are seeing record inflows of assets under management, with a sizeable 142% increase in a decade,” adds Joel Hernandez, Deputy Chair of the JFA.
All this is good for the EU market too – it opens up multiple options for EU investors, enabling seamless and effective connectivity between the EU and global markets, keeping high quality EU and global capital moving, generating growth and opportunity.
Reflecting on the past ten years, it is perhaps the ‘high quality’ bit here that is most important. At the outset, AIFMD was intended to protect investors. Alongside the onshore EU fully AIFMD compliance option, which will be the solution for certain managers, Jersey’s private placement option has established itself over the past decade as a key part of the modern European alternative funds infrastructure, helping to achieve that aim of investor protection and market integrity while at the same time driving high quality capital to where it is needed most.
More than 400 people from across the industry, as well as politicians and regulatory representatives, attended this year’s Jersey Funds Association (JFA) Annual Dinner on 14th July.
Representatives from across Jersey’s funds industry came together this month to celebrate the ongoing growth of the sector and discuss key trends shaping the future alternative funds landscape.
More than 400 people from across the industry, including lawyers, service providers, managers and accountants as well as politicians and regulatory representatives, attended this year’s Jersey Funds Association (JFA) Annual Dinner, held at the Trinity Showground on 14th July.
Held each year, the event brings together Jersey’s funds community and serves to highlight key developments and trends in the market and point to the work undertaken by the JFA.
Speaking at the event, Michael Johnson, JFA Chair, told the audience that it had been another successful year for the funds industry, with the growth in fund managers in the jurisdiction in particular proving to be a critical element of Jersey’s funds infrastructure, against a backdrop of increasing regulation and a growing emphasis on substance.
With figures in early 2023 indicating that the total net asset value of funds under administration in Jersey stood at a record high of more than half a trillion pounds (£523bn), Michael said:
“We have a buoyant and active community, both in the funds and the fund manager space. In fact, we see an ever-increasing community of managers fully resident in the island across private equity, hedge funds, venture capital, debt and real estate. These managers are bringing a real depth and diversity to our industry, at a time when substance continues to be high on the agenda.”
Michael pointed in particular to the ongoing success of the Jersey Private Fund structure (JPF), with more than 600 having now been established in total – meaning that the number of JPFs has now overtaken collective investment funds in Jersey for the first time. He added:
“In particular, alternative funds now represent 90% of our total funds business, with private equity and venture capital making up 44% of total funds business undertaken in Jersey. It has created a very stable platform of long-term capital, largely insulated from short term market sentiment.”
However, Michael also urged caution around the potential impact of the ongoing high inflation environment on Jersey’s funds sector, given its weighting towards alternatives, and the need for the industry to embrace innovation in an increasingly complex and uncertain environment:
“Recently two-year UK Gilts stood at 5.5% and are expected to surpass 6% in the next year. That’s the benchmark for the risk-free rate – the key hurdle for allocators when determining allocations to portfolios. Not only that but allocators are also contending with the denominator effect, further impeding their sentiment and ability to continue to allocate so freely to closed-ended alternatives. We cannot ignore some significant sectors are likely to be impacted – real estate, a key area of Jersey, being one.
“As we cross the rubicon to a higher interest rate environment, embracing innovation, being agile and looking at our product range to see how we can introduce a wider choice of products and services will be vital. It’s why this year the JFA has established an innovation sub-committee, as we look to gather critical momentum in affirming Jersey’s reputation as forward-thinking, truly innovative funds domicile.”
Gold sponsor for the evening was Mourant and silver sponsors were BNP Paribas, Hawksford, Ogier and PwC, whilst the champagne reception was sponsored by Carey Olsen and the NextGen table was hosted by KPMG. Entertainment at the event was provided by comedian and writer Simon Evans.
A new white paper produced with the support of Jersey Finance has highlighted how the rapid growth of asset tokenisation is set to transform the cross-border funds industry over the coming years...
A new white paper published by IFI Global and supported by Jersey Finance has highlighted how the rapid growth of asset tokenisation is set to transform the cross-border funds industry over the coming years.
The paper, ‘The Tokenisation of Real Assets', highlights that forecasts for the growth of asset tokenisation are universally bullish, with one report predicting that asset tokenisation will grow into a US$16.1 trillion business by 2030 (BCG and ADDX).
It goes on to explore why asset tokenisation is on the cusp of widespread global adoption and how real assets, including private equity and real estate, are likely to be substantially impacted by tokenisation in the coming years.
In particular, the paper points to some of the major benefits of tokenisation for managers of real assets, but also highlights that there are a number of challenges the industry will need to overcome before it can realise its full potential.
You can read the full white paper here.
Expert speakers at a recent Masterclass event, organised by the Jersey Funds Association, provided valuable insights into key ESG developments and their implications for the local industry...
New regulation and industry wide adoption of ESG and sustainability metrics have created significant opportunities for service providers, while data management now occupies a central role in achieving ESG compliance, both in the eyes of regulators and investors.
Expert speakers at a recent Masterclass event, organised by the Jersey Funds Association, provided valuable insights into these dynamic developments and their implications for the local industry.
The event, held on 6th June at the Royal Yacht Hotel, attracted over 40 industry participants from Jersey's funds sector. The guest speakers explored various key topics, including the rapidly evolving regulatory landscape, Jersey's potential to grow as a leading centre for ESG funds, the integration of ESG principles in private equity, and the growing importance of data management in the ESG sphere.
The event emphasised the intricate nature of global ESG and sustainable investment regulation, noting the considerable differences in disclosure frameworks between Europe, the US and Asia. The differences present clear opportunities for Jersey domiciled service providers, managers and funds, who may opt in or out of differing jurisdictional frameworks, while relying on the robustness of the JFSC as their home regulator.
As global standards continue to evolve, especially in relation to nature and climate disclosures, the significance of "financial grade" data management is poised to grow. This, according to visiting speaker Antonello Argenziano, creates potential avenues for fund administrators and managers aiming to drive progress and differentiate themselves.
The speakers highlighted Jersey’s strong position, underscoring the alignment of its flexible ESG disclosure framework with international standards and that Jersey implemented anti-greenwashing rules in 2021, with further enhancements in the pipeline.
Tom Powell, Chair of the JFA's ESG Sub-Committee and CEO of Amthe Capital, led the first session on regulation and disclosure. Powell remarked: "Our latest Masterclass offered industry participants a valuable opportunity to delve into crucial areas of regulatory progress in the ESG investment landscape. The rapidly evolving lexicon of acronyms can be overwhelming. There is a genuine sense that Jersey's expertise in administration, data management, risk, compliance, and governance is highly desirable as the industry continues its forward momentum."
He continued: “It’s really important that as a jurisdiction Jersey continues to tell its story in this area, because it has a fantastic story to tell.”
The JFA thanks all those who attended and facilitated the event. More about Jersey’s proposition in sustainable finance can be found here.
The speakers at the masterclass were: Tom Powell, CEO of Amthe Capital - Jersey; Alison Cambray, ESG, Sustainability & NetZero Director at PwC Channel Islands; David Postlethwaite, ESG Associate Director at KPMG in Jersey; Antonello Argenziano, Product Director at Intertrust Luxembourg; and Jane Burns, Sustainability and Climate Change Engagement Manager for the Government of Jersey.
The latest industry figures show that the value of regulated fund assets serviced in Jersey rose by close to £39bn over the course of 2022...
The value of regulated fund assets serviced in Jersey rose by close to £39bn over the course of 2022 while the corporate and banking sectors also posted positive figures, according to the latest industry statistics.
According to the most recent quarterly figures to be collated by the Jersey Financial Services Commission (JFSC) for the period ending 31 December 2022, the value of regulated funds under administration increased by £38.6bn (8.6%) compared to 31 December 2021 to stand at a new record level of £488.8bn.
Across the core alternative asset classes – which now make up 78% of total funds business in Jersey - the hedge fund sector in particular contributed to growth, increasing by some 24% over the twelve months.
In addition, a total of 638 Jersey Private Funds (JPFs) have now been registered in Jersey since the structure was launched in 2017, according to the JFSC – an increase of 107 (20%) over the past twelve months. The value of assets held in JPFs is now £61.7bn and is in addition to the headline funds figure.
Meanwhile, the total value of deposits in Jersey banks increased by £14.8bn (11%) over 2022 to stand at £148.3bn – the highest level since 2013 - with 58% held in foreign currencies.
Corporate activity also remained positive with a total of 35,028 companies on the register at the end of the year, increasing marginally (1.5%) year-on-year to an all-time high.
In addition, 79 Jersey company vehicles are now listed on global exchanges around the world, including the London Stock, New York and Hong Kong Stock Exchanges, with a combined total market capitalisation of £167.4bn.
Commenting on the figures, Jersey Finance CEO, Joe Moynihan, said:
“These are strong year-end figures that paint a sustained positive picture of our finance sector, particularly against the backdrop of global economic flux. The consistent growth of our funds sector confirms the appeal of our offering, cementing our position as a leading alternative funds hub in Europe.
“Meanwhile, our banking sector remains resilient, providing sought-after stability in uncertain times, and our corporate sector continues to see steady growth, reflecting a healthy holistic platform supporting investors, families and businesses around the world. This equates to a strong message, and one that will be hugely positive as we maintain our expansion and growth in global markets, including the US and South-East Asia.”
Mike Johnson, Chair, Jersey Funds Association, added:
“Jersey’s funds sector is clearly continuing to appeal to both managers and investors, and that is thanks to the high standard of our offering, which combines a depth of expertise, flexibility, certainty and a stable outlook rarely found in other jurisdictions. Of particular note in these figures is the ongoing march of the JPF, with more than 100 established over the year. It has firmly established itself as a go-to vehicle for alternative fund structuring, adding considerably to our reputation as a premiere funds jurisdiction.”
Jersey’s funds industry is maintaining its upward trajectory – but evolution in the market means that the JFA is busier than ever, according to committee members speaking at the JFA’s recent Chairman’s Update event...
Jersey’s funds industry is maintaining its upward trajectory – but evolution in the market, regulatory change and competition means that the Jersey Funds Association (JFA) is busier than ever, according to committee members speaking at the JFA’s recent Chairman’s Update event.
Held at the Pomme d’Or recently (1 March), the event saw Chairman Michael Johnson and Vice Chairman Joel Hernandez assess the current landscape and set out some of the priorities for the JFA over the coming year, whilst sub-committee heads also took part in a Q&A session highlighting some of the trends, challenges and opportunities on the horizon.
Pointing to the fact that the value of assets serviced in Jersey rose to new record levels of more than £0.5trn in 2022,Michael also emphasised how important it was to be alive to the potential for change in the wider landscape:
“Our figures continue to illustrate an upward trend, but it’s really important we stay ahead of the curve and anticipate regulatory change and shifts in investor behaviour to maintain our attractive ecosystem for alternative funds.
“Speed to market, cost-effectiveness and service quality are absolutely crucial in our segment of the alternatives market and we are fully focused not only on safeguarding our position but on enhancing our proposition in those areas. On the ESG front, for example, the key is to establish a robust framework but without creating hurdles, whilst on the innovation front we see opportunities to build up a track record in blockchain, tokenisation and digital assets.”
“From a legal and technical perspective, it has never been busier in terms of the need to respond to consultations and international and domestic regulatory change – such as looking at our AML/CFT frameworks, enhancing our range of fund structures and regimes, and ensuring we keep the cost of doing business with Jersey competitive. We are fortunate in the JFA to have broad and diverse expertise through our membership to support our efforts in these areas.”
The JFA will be holding a series of further events for members over the coming months to explore key areas of note for the industry, including a Legal and Tax Masterclass (20 April) and two Town Hall events on ESG (15 May) and Digital (5 June). The JFA’s annual dinner has also been confirmed for 14 July. Further information can be found via the JFA website.
The introduction of new Limited Liability Company (LLC) legislation in Jersey is anticipated to significantly enhance the jurisdiction’s proposition as a leading jurisdiction supporting US alternative fund managers.
New Limited Liability Company (LLC) legislation can significantly enhance Jersey's proposition as a leading jurisdiction supporting US alternative fund managers.
Officially approved by the Government of Jersey this week (7 February), the law, which enters into force on 14 February, expands Jersey’s existing comprehensive suite of private fund vehicles, adding a new structure that is intended to be familiar to US private equity, venture capital and other alternative fund professionals.
Benefitting from a simple registration process and flexible governance requirements, the Jersey LLC, which will have separate legal personality and can be classed as a ‘body corporate’, is expected to offer a number of key opportunities, including being used for issuing securities, as a manager vehicle, and as a fund entity in conjunction with the hugely successful Jersey Private Fund (JPF) regime.
The structure also provides certainty for US managers looking to fundraise within the EU, with the Jersey LLC able to market into Europe, subject to the usual fund permissions from the Jersey Financial Services Commission (JFSC), under the Alternative Fund Managers Directive (AIFMD) third country private placement rules.
Elliot Refson, Head of Funds, Jersey Finance, said: “Following a period of extensive consultation, the introduction of the Jersey LLC is a significant development for Jersey’s funds sector and bolsters our ability considerably to support US fund managers.
“The Jersey LLC has been deliberately and specifically developed to be a structure US managers and investors are familiar with, backed up by Jersey’s world-class ecosystem for cross-border alternative funds, our leading regulatory framework and our position as a non-EU European time-zone hub.
“Through the Jersey LLC, US fund managers will now be able to take advantage of seamless marketing into the EU via national private placement regimes, underlining our proposition as the ideal gateway into Europe.”
Philip Pirecki, Jersey Finance Lead in the Americas, added: “LLCs are hugely popular in the US private markets space, with advisers, managers, and investors very familiar with the structure. In that light, we see significant opportunity for the Jersey LLC to support their needs.
“Since opening our office in New York three years ago, we have seen our book of US business increase significantly. By adding the LLC structure to our proposition, we are expanding our solutions for the US market even further, as we look to meet the cross-border needs of US managers and sophisticated investors.”
Michael Johnson, Chair of the JFA, commented: “The funds industry has seen a sustained increase in business from the US over recent years, particularly as alternative managers have sought to draw on Jersey’s platform for accessing EU investor capital efficiently. The introduction of the long-awaited Jersey LLC meets a growing need in that light, offering a vehicle that is familiar to managers but at the same time that offers all the benefits of Jersey as an expert and well-regulated alternative funds centre in Europe. We expect to see strong appeal for the LLC in the months ahead from managers across the private equity and venture capital space.”
The introduction of the Jersey LLC follows a period of sustained growth for Jersey’s funds industry in relation to the US market, with funds business from US promoters more than doubling over the past five years.
Ian Horswell, Global Head of Business Development for Funds at JFA Member Firm Suntera Global, reflects on Jersey Finance's recent US Roadshow and how Jersey is evolving its proposition for US managers…
Towards the end of 2022, Jersey Finance embarked on its first US roadshow, hosting events in Miami, Chicago and San Francisco, as well as New York, where it has had an office for three years.
A number of industry professionals from Jersey Funds Association member firms were involved in the roadshow, including Ian Horswell, Global Head of Business Development for Funds at Suntera Global. Here, Ian reflects on the roadshow and how Jersey is evolving its proposition for US managers…
Q: What sort of business is currently being undertaken between Jersey and US?
Ian Horswell (IH): We continue to believe that Jersey is a fantastic jurisdiction for US managers looking to access European assets or working with European investors – it is well respected, well-regulated and has tax neutrality, all of which is appreciated increasingly by managers we speak to.
In May last year, for instance, we acquired US-based fund services provider Socium Fund Services and since then we have seen rising levels of new business flows between both jurisdictions.
Q: Why is the US such an interesting market for Jersey?
IH: The US is the largest funds market in the world and we’ve seen some exciting growth in the US this year. It’s also a market that is experiencing a sharp movement towards the outsourced model – so it’s a space where Jersey can add real value.
Against that backdrop we hired a dedicated senior Business Development lead in the US to help tell our and Jersey’s story. The feedback is that US managers are increasingly used to the IFC model and see Jersey as an interesting gateway to Europe.
Q: How is Jersey’s reputation evolving in the US?
IH: I think Jersey’s reputation is growing all the time. Jersey Finance and JFA member firms are more and more active in the US, which is giving Jersey greater visibility, while a number of US law firms have a large presence in London, which means that Jersey is already familiar to them. US managers and lawyers are using Jersey and having a good experience in doing so – that quality of service is a really strong play in the US market.
Q: How useful was the Jersey Finance US Roadshow in getting Jersey’s message across?
IH: The roadshow was really useful, both from a jurisdictional and an industry perspective. Jersey Finance and Suntera are already well known in New York and its surrounding areas, and this series of roadshow events brought our story to a much wider audience and new groups of stakeholders.
Chicago, for example, was a new city for both Jersey Finance and Suntera, but actually Chicago has several managers who use Jersey and we had lots of legal contacts in the area too. The roadshow gave us an opportunity to reinforce our message face to face with a new audience, which was vital, and gave managers a chance to ask questions.
It also gave us an opportunity to really focus and ensure our clarity of message – that Jersey is well positioned to support the US market, with excellent experience in all major asset classes. One important point which we highlighted a lot during the week was our political stability, whilst we also pointed consistently to how, as a small jurisdiction, Jersey punches well above its weight with over 14,000 financial services employees.
Q: How well is Jersey perceived in the US market?
IH: Overall, the Roadshow has really helped move the dial in terms of Jersey’s proposition for the US. What was clear was that those managers and lawyers that use Jersey already are big fans.
However, we also need to continue to focus on other groups, those that are less familiar with what we do, and do some educational work to explain our USP over other IFCs – in particular in relation to our responsiveness, pragmatic regulator, and the impressive flexibility and experience we offer. That will be our focus for the US in 2023.
The JFA’s Legal and Technical Sub-Committee held a briefing this week, outlining some of the measures the industry is taking to maintain Jersey’s leading position as a centre for alternative funds...
Professionals from across Jersey’s funds sector including lawyers, administrators, NEDs and compliance specialists, heard from the JFA’s Legal and Technical Sub-Committee this week, at a briefing outlining some of the measures the industry is taking to maintain Jersey’s leading position as a centre for alternative funds.
A number of speakers from the sub-committee, including Chris Patton, Head of Private Equity, Intertrust Group, Simon Burgess, Fund Advisor and Non-Executive Director, and Matt McManus, Managing Associate, Ogier, discussed a range of areas of regulatory and legislative focus for the JFA, including the recent JFSC AML Exemptions Consultation Paper, a JFSC Outsourcing Paper and JFSC Consultation on Senior Management.
The session was hosted by Joel Hernandez, Head of Funds, Mourant, Vice Chair of JFA, and Chair of the JFA Legal and Technical Sub-Committee, who said:
“Our role as a sub-committee is to look at ways to defend and develop our industry from a legal and technical perspective, working with other stakeholders and organisations, to enhance Jersey’s proposition and add value to the funds sector. The fact that so many people joined us for this session reflects the appetite to support the evolution of Jersey’s funds industry, which is fantastic to see.
“The most recent figures for our funds industry were extremely positive, with AUM and AUA reaching record levels yet again. It’s clear though, that there is a huge amount of work being undertaken by the JFA to maintain our position and appeal in a landscape that is extremely competitive and increasingly influenced by international regulatory and compliance pressures – and this is what the session really focused on.
“From looking at our AML/CFT frameworks and how we can keep the cost of doing business with Jersey competitive, to enhancing our Jersey Private Fund regime, as well as honing our ecosystem for virtual assets – there is a lot that the Committee has been working on. On balance, we feel that Jersey remains in a strong position, given the support of the JFA's members and its other partners.”
The total net asset value of regulated funds administered in Jersey rose by almost £8bn over the first half of 2022 , according to the latest industry statistics.
The total net asset value of regulated funds administered in Jersey rose by almost £8bn over the first half of 2022 whilst the corporate and banking sectors also posted record mid-year figures, according to the latest industry statistics.
According to the most recent quarterly figures to be collated by the Jersey Financial Services Commission (JFSC) for the period ending 30 June 2022, the value of regulated funds under administration increased by £7.7bn (1.7%) compared to 31 December 2021 to stand at £458bn.
The alternative asset classes, including private equity, real estate and hedge, continued to drive growth to now represent 89.5% of total funds business, with private equity and venture capital making up 44% of total funds business undertaken in Jersey. The value of hedge fund business booked in Jersey in particular grew over the past six months, increasing by 14%.
In addition, a total of 556 Jersey Private Funds (JPFs) have now been registered in Jersey since the structure was launched in 2017, according to the JFSC- an increase of 100 (22%) over the past twelve months. Total Assets Under Management (AUM) held in JPFs, which is reported separately to the quarterly figures for regulated funds, now stands at£61.7bn, spanning private equity, venture capital, real assets and other global equities.
Meanwhile, the total value of deposits held in Jersey banks increased by £10.8bn (8%) over the first six months of the year to stand at £144.4bn – the biggest half year increase since 2019. 57% of deposits in Jersey banks were held in foreign currencies.
Corporate activity also remained strong over the first half of the year. There were 35,447 registered companies on the register as at 30 June 2022 – the highest number in the past decade – whilst in the second quarter alone there were 974 corporate registrations, the highest quarterly figure on record.
Commenting on the figures, Jersey Finance CEO, Joe Moynihan, said:
“In a persistently challenging environment, these are really robust figures for our industry. We have seen consistently positive figures and a growth trajectory for our funds industry for some time now, and the past six months have consolidated our position as a leading specialist funds hub in Europe.
“Meanwhile, it’s pleasing to see the appeal of our IFC reflected in impressive figures for our banking and corporate sectors too. Record levels of company incorporations over the past six months and a resilient banking sector underline Jersey’s appeal as a stable, reliable centre, supporting international business and growth as the world looks to rebuild after a period of uncertainty.”
“Particularly as we look to build out our service lines and take our messaging to new markets in 2023, in particular across Asia and the US, these positive figures paint a very positive picture of the role Jersey is playing in supporting high quality cross-border capital flows.”
Mike Johnson, Chair, Jersey Funds Association, added:
“The fact that Jersey has maintained its upward trajectory in 2022 against a backdrop of instability in Europe and a complex post-pandemic fundraising landscape, is a reflection of the high regard in which Jersey is held by managers. The growth of the JPF, five years since it was introduced, is particularly noteworthy. Its success means that today, across its suite of fund regimes, Jersey is administering high quality global fund assets well in excess of £0.5trn, and that figure continues to grow.”
The JFA has named its new-look committee following its recent AGM...
Following its recent Annual General Meeting (8 July), the Jersey Funds Association (JFA) has elected a new-look committee as it continues to champion Jersey's ecosystem for alternative funds.
With outgoing Chairman Tim Morgan completing his three-year tenure, Michael Johnson takes over the role, with Joel Hernandez taking on the position of Vice Chairman. Michael is Group Head of Institutional Services at Crestbridge, whilst Joel is a Partner at law firm Mourant.
The new committee features some continuity whilst also introducing a number of new faces, with Robin Wilson, Sophie Reguengo, Stephanie Hopkins, Clive Spears and John Riva all joining. Remaining on the committee this year are Richard Anthony, Mike Byrne, Steve Cartwright, Ben Dixon, Ben Honeywood, Dilmun Leach, Robert Milner, Tim Morgan, Simon Page, Martin Paul, Tom Powell, Peter Rioda, Ben Robins, Martin Rowley, Sarah Sandiford and Elliot Refson.
At the AGM, outgoing JFA Chair Tim Morgan, who is a Partner at law firm Maples, provided an assessment of achievements and highlights from the past year:
“Jersey's funds industry continues to operate in a fast-evolving market, with regulatory, economic and geopolitical uncertainty continuing to pose challenges – but the fact that Jersey’s funds industry succeeded in reaching new record highs of assets under administration in 2022 and in each of the past three years speaks volumes about the appeal of Jersey’s platform of stability. As ever we need to continue to work hard to underpin this.
“Reflecting on the past three years, there’s no doubt it has been a busy but exciting time to lead the JFA, through a complex period encompassing the implications for Jersey of the effects of Brexit, to the challenges of the global pandemic, to on going enhancements to Jersey’s international standing for tax and regulation. It is a credit to the committee and to the wider industry that Jersey’s funds offering has gone from strength to strength throughout this period. I’m really grateful for the efforts of all those who have given their time to the committee, including Caroline Harrington, who is retiring from her role as secretary of the JFA after many years. We have achieved a lot – from navigating tax and regulatory changes, to integrating ESG into our thinking and supporting cutting-edge training for our members.”
Meanwhile, newly appointed JFA Chairman Michael Johnson added:
“There’s no doubt that the landscape continues to pose challenges. Geopolitical developments have significantly worsened since the increased hostilities in Ukraine, and from a macro-economic perspective, inflation rates, interest rate changes and other economic indicators are pointing to a significantly more challenging economic environment. Jurisdictionally, the competitive environment remains intense and evolving too.
“But there is plenty for Jersey to be positive about. We have a compelling proposition, an industry that is growing at an impressive rate, and more and more managers of substance looking at Jersey to support their cross-border needs. Private equity, venture capital and real assets are at the heart of global economic rebuilding efforts, and we have precisely the experience and platform here to support that and make a positive impact.”
With reference to Jersey Finance's ground-breaking 'Jersey's Contribution to Global Value Chains' report, JFA Chair Tim Morgan writes in Funds Europe magazine, looking at the importance of evidencing the positive global impact of Jersey's funds sector...
Towards the end of last year, Jersey Finance published a ground-breaking report that highlighted the value Jersey’s finance industry adds to global markets and the positive impact the work done in Jersey has around the world.
The ‘Jersey’s Contribution to Global Value Chains’ report explores the redistribution of the value of work done in Jersey – and it makes some significant findings. In particular, Jersey firms intermediate £1.4 trillion (€1.7 trillion) of global capital each year and support £170.3 billion of global economic output.
That activity in turn supports millions of jobs of ordinary people, and accounts for 0.27% of total global economic activity each year. It’s an impressive contribution globally for a small jurisdiction.
Read the full article here.
Jersey Finance launches latest white paper in a series undertaken by IFI Global
Stability, expertise and flexibility have been highlighted as key components of the international fund domicile of the future in a new report published this month by IFI Global and supported by Jersey Finance.
‘The Evolution of the International Fund Jurisdictions’ report forms the latest in a series undertaken by IFI Global with Jersey Finance, with previous reports published over the past two years having focused on fund domiciliation, structuring, and fund governance.
This new report explores the origins of the fund domiciliation industry and how a number of locations around the world with no previous connection to funds, have ended up playing fundamental roles at the heart of the global funds landscape, servicing more than US$16 trillion of fund assets.
The report also explores how those centres, including Jersey, BVI, Bermuda, Cayman, Guernsey, Ireland and Luxembourg, have since evolved and what their past experiences tell us about their future direction. Among the report’s key areas of focus are:
· Key dates, from the establishment of the first expatriate banking operation in Jersey in the 1960s to EU alternative fund regulation in 2018
· The origins of the international funds industry in the 1980s, including the first investment funds offered to expats and the largely Anglo-Saxon asset management industry of the 1990s
· The dawn of alternatives, including the introduction of regulatory measures, the shift towards institutional investors, the heightened focus on governance and substance in the wake of the global financial crisis, and the impact of Brexit
· The future, including the growth of sustainable finance and crypto funds and the importance of first mover advantage when it comes to new investment categories
Commenting on the findings, Elliot Refson, Head of Funds at Jersey Finance, said:
“Given the trends over the last decade or more highlighted in this paper, there’s no doubt that the fund jurisdictions that will be most successful in the future will be those that are stable with strong expertise and infrastructure, and robust but flexible regulatory frameworks. This has really been Jersey’s mantra for the past twenty years, and we’ve seen the fruits of that in the growth of Jersey in recent years as a trusted funds domicile.
“There will undoubtedly be more changes over the coming decades and our focus will remain on staying true to our values and on retaining our position as an integral part of the global fund landscape.”
Simon Osborn, CEO of IFI Global and author of the report, added:
“Fund domiciliation patterns have always been subject to change and there is no reason to believe this will not continue to be the case in future. To understand how the asset management business might develop in the future, it is a good idea to know something about how the international fund jurisdictions, on which this industry depends, are evolving.
“This White Paper touches upon how a few unlikely locations, dotted around the world, got into this business, focuses on what is happening in international fund domiciliation today and explores what may well happen to international fund jurisdictions over the next few years.”
The new research can be viewed and downloaded here.