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.
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.
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.
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.”
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.”
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.
In our latest blog, JFA Committee Member and Mourant LP Partner Alistair Horn, together with Mourant colleagues John MacFeeters (Counsel) and Rachel Fowler (Senior Associate) explain why now is an opportune time to look at how Jersey can support trends in the UK real estate investment space...
By Alistair Horn, Mourant LP Partner and JFA committee member, John MacFeeters, Counsel and Rachel Fowler, Senior Associate at Mourant
With reports suggesting that global investors have set aside up to £46bn to deploy in the London office market alone this year (the highest since 2012), it’s an opportune time to take a look at some of the trends we are seeing in Jersey for UK real estate investments.
For years, Jersey has been an attractive option for asset managers looking to establish real estate holding structures, and for investors wishing to invest in real estate assets and recently we have seen a noticeable increase in the use of Jersey REIT structures, whilst the traditional Jersey Property Unit Trust (JPUT) remains just as popular as ever.
In fact, there has been an uptick in establishing new JPUTs despite the continued impact of COVID-19.
We've seen a particular recent trend in the increased use of JPUTs to acquire healthcare and logistical assets, with the importance of the latter increasing due to the online activity of consumers during the past 12 months and beyond. Notably, many of the JPUT investors have come from South East Asia and North America, emphasising how far-reaching the JPUT has become.
Meanwhile, Jersey continues to grow its market share in private REITs and this trend is expected to continue. The UK REIT regime is already attractive to many sovereign wealth funds, pension funds, major global financial institutions and specialist property investors.
However, it is expected that this market will grow following the UK Budget 2021 announcement of the rise in the corporation tax rate from 19% to 25% starting in 2023. This change will make the REIT regime more attractive to a broader range of UK real estate investors.
In addition, we are seeing a trend that 'responsible' capital and sustainability are no longer 'fringe' concepts. They do (and will increasingly need to) underpin strategic decision-making and investment allocations by fund managers in the coming decades, as the global economy grapples with the impact of climate change, other potential environmental damage, rising inequality and political and economic crises.
Funds focusing on social housing, urban regeneration, supported living as well as more bespoke projects such as water related regeneration are becoming more common.
With these trends in mind, it’s worth noting that there are a number of reasons underpinning Jersey's continuing appeal in this space that should give managers and investors confidence, including the following benefits.
As an independent jurisdiction conveniently located near the UK and mainland Europe, Jersey appeals to managers who want to access global investors whilst remaining outside the AIFMD environment.
Removing the additional costs associated with AIFMD compliance, whether that is achieved by marketing into the EEA via national private placement routes or by targeting the US and Asian markets, can result in lower running costs and higher investor returns.
Managers and investors alike are familiar and comfortable with Jersey as a jurisdiction, and this appeal is enhanced by Jersey's global reputation as a market leader in promoting anti-money laundering measures and combating financial crime.
Speed to market and cost efficiencies
As detailed below, it is possible to establish and manage real estate holding structures efficiently and effectively due to the flexibility and expertise that the Jersey real estate services industry can provide.
Holding vehicles can be established on a same day basis, whilst a Jersey 'private fund' can be established and authorised in as little as 3 business days (with a slightly longer lead time where there is EEA/UK investor marketing).
The expertise available across legal, accounting and administrative functions can also lead to lower launch costs and on-going maintenance costs, which ensures that Jersey remains a cost-effective choice.
Jersey's company, partnership and unit trust laws are broadly based on the UK equivalents and will therefore be familiar to lawyers and asset managers in the UK and other common law countries.
The Jersey legislation is, broadly speaking, more flexible and more permissive which means it can easily accommodate the commercial terms of a deal.
JPUTs, for instance, are popular for single investor/single asset structures, but they are equally suited for multi-asset joint ventures or as investment fund structures. JPUTs often hold UK real estate directly, however, a JPUT does not need to, nor is a JPUT required, to hold the UK real estate directly. In addition, we are also seeing a revival in the use of JPUTs as hybrid or evergreen investment fund structures.
Jersey's regulatory environment provides significant flexibility in choosing a regulatory regime for a real estate structure, its investors and asset managers. Whilst some small structures can benefit from special dispensations afforded to joint ventures, the 'private fund' regime in Jersey is a popular option where there are a small number of sophisticated institutional investors who would benefit from a light-touch and effective regulatory approach.
For those asset managers who are seeking to attract a larger number of investors, or less sophisticated investors, then there are several public fund regimes which offer increased investor protection.
Jersey's tax regime is designed to avoid double taxation on real estate holding structures, so that these remain tax neutral where appropriate for non-resident investors and asset managers who are dealing with foreign real estate assets.
Jersey is well known for its real estate-based service provider expertise, with service providers able to confidently support managers and investors throughout the entire property life-cycle from acquisition to development, financing, leasing, planning work and joint ventures, and eventual disposal.
Against the backdrop of its longstanding appeal and given the current trends in the market, as a jurisdiction, Jersey has the right infrastructure and ecosystem to assist first time and established asset managers with setting up and administering real estate fund structures, whilst at the same time providing certainty of tax treatment - which is not necessarily fully mirrored in other jurisdictions.
Speaking at the recent JFA Dinner, Chair Tim Morgan provided an update on Jersey's funds industry...
An ability to remain agile in a changing landscape, deliver innovative solutions and offer a platform of stability are key differentiators for Jersey’s funds industry that are resonating clearly with managers and investors, according to the chairman of the Jersey Funds Association (JFA).
JFA Chair Tim Morgan gave his update at the JFA Annual Dinner recently (23 September), attended by more than 350 funds and wider industry professionals, including an overview of the current funds landscape, the ongoing work of the JFA with its key stakeholders in Jersey, and future opportunities for Jersey’s funds sector. It was the first physical return to events for the JFA since 2019, since when all updates had been provided on a digital basis.
Pointing to the fact that Jersey’s funds industry recorded another new record high of fund assets being administered at the half-way point in 2021 (£436bn), with private equity and venture capital increasing by 21% year-on-year and the number of Jersey Private Funds (JPFs) rising to 456, Tim commented:
“The latest figures show that Jersey’s focus on alternative investment funds continues to provide a stable platform of long-term capital. From the start it was clear that the pandemic was affecting participants differently. Large, well-known sponsors with strong platforms continued to fundraise. Conditions were more challenging for new and smaller investment groups. However, many have in any case proceeded with the raising of successful, small, first funds and club deals, and that correlates with the continued growth in the number of JPFs we have seen. It’s a real endorsement of Jersey’s appeal and expertise.”
In addition, Tim, who is also a partner at the Jersey legal practice of the Maples Group, highlighted the importance of Jersey’s funds industry maintaining momentum in delivering innovative solutions to global investors:
“Jersey has continued to test innovations in digital assets, as well as increased amounts of structures aimed at sustainable technologies and related assets, which is very positive. In addition, significant changes have also occurred in the administration space – increasingly tech is a key component of how services are being provided, which is enhancing how governance, risk management and compliance are managed in practice. Jersey service providers have been impressive in adopting a digital first approach over the past year and this is undoubtedly a key part of our success.”
Meanwhile, Tim also highlighted that shifts in global geopolitics, regulation and competition were providing challenges, with Jersey’s focus on maintaining a perfect ecosystem for alternative funds putting it in a strong position:
“The political environment is volatile – the change in US administration; increased pressures from the EU and OECD in relation to tax; numerous policy initiatives from UK in the post Brexit and post pandemic environment; upcoming elections in Germany and France. All this means that there is a need for continual engagement in relation to Jersey’s position internationally. At the same time, jurisdictionally, the competitive environment is intense.
“However, Jersey’s ability to pivot in an agile manner, in particular between JPFs and more narrowly-held joint venture and co-investment vehicles, is valuable and provides popular, efficient solutions. At the same time, Jersey has an incredibly strong culture of partnerships with the JFSC, government, and other industry elements all working together on areas of opportunity or concern for our funds and wider finance industry. This is a real differentiator for us, as we continue to focus on our core message - that Jersey offers a unique ecosystem to provide a platform of stability in a rapidly changing market.”
Entertainment at the event, which was held at the Trinity Showground, was provided by comedian and writer Jo Caulfield and London-based singer-songwriter and former Jersey Young Musician of the Year Sam Walwyn.
The main sponsor of the dinner was Mourant, whilst silver sponsors were BNP Paribas Securities Services, IQ-EQ, Ogier and PwC, and the champagne sponsor was Carey Olsen.
In our latest blog, JFA Committee Member and PwC’s Asset Management Leader, Mike Byrne, looks at how Jersey’s alternatives sector can be an engine of growth and a force for good in a rapidly changing world…
Over the past 40 years, the private markets (or alternatives) sector has grown to become a bedrock of high value employment and prosperity in Jersey – the sector now accounts for nearly 90% of funds under administration in the jurisdiction.
As assets under management (AuM) in the private markets sector continue their rapid expansion worldwide, they’re set to play a key role in driving recovery and creating more sustainable and socially inclusive economies both here and across the globe.
The private markets designation brings together private capital (private equity and credit) and real assets (infrastructure and real estate), and this has real relevance for Jersey which has a formidable reputation in private equity and real estate in particular.
As investors go in search of returns that other asset classes may struggle to deliver, private markets are one of the fastest growing areas of asset management globally. It’s a sector that is now by no means niche – it’s fast becoming mainstream.
Reflecting that, earlier this year, PwC published Prime time for private markets: The new value creation playbook, an in-depth exploration of how the sector is evolving and how to capitalise on the potential. According to that report, it is anticipated that private markets AuM will increase by $4.9 trillion to reach $14.4 trillion by 2025 - around 10% of overall AuM worldwide.
Further, in the JFA’s own survey of its members at the end of last year, respondents painted a clear picture of an industry that is looking to grow and diversify, driven by the private markets. In an industry with alternatives at its core, 69% of respondents said they were confident that their business would grow over the next five years, whilst both short and medium term strategic priorities for Jersey’s funds industry remained focused on private equity, real estate, venture capital and debt funds, according to respondents.
As the PwC report highlights, however, this is an increasingly challenging market in which the prizes will be hard won.
· In search of return: with entry multiples so high and economies still fragile, traditional value levers such as financial engineering and cost reduction may no longer be enough to deliver target returns. Forward-looking private markets managers are therefore broadening their value creation lens in areas ranging from strategic repositioning and top-line growth to longer hold and ‘permanent capital’ models.
· Competing in a concentrated market: Institutional investors’ growing demand for multi-asset mandates is making it difficult for smaller, single-asset-focused managers to compete with big, diversified rivals. There’s still room for specialised players with the right capabilities. The firms that are most vulnerable are those that have neither scale nor specialisation. They risk being squeezed out of the picture.
· Keeping pace with changing stakeholder expectations: the other, and in many ways most far-reaching, challenge is the shift in stakeholder attitudes. As environmental, social and governance(ESG) priorities in areas such as health, sustainability and social inclusion come to the fore, ESG performance has become as important as financial returns.
This isn’t just altruism. As pension and sovereign wealth funds’ private markets allocations increase, reflecting the ‘people’s priorities’ will be ever more important in securing large mandates and sustaining scale and growth. Embracing ESG would help private markets managers to reframe public perceptions, cultivate closer affinity with investors and generate new forms of value. Investment opportunities include helping portfolio companies to move towards net zero production. Private markets managers could also help to bridge the funding gap for small and innovative growth businesses and boost infrastructure investment in areas ranging from healthcare to digital communications.
With government coffers drained by the COVID-19 pandemic, the record levels of dry powder at private markets managers’ disposal could make them a vital contributor to recovery and regeneration – a Marshall Plan for the 21st Century. This would need to be weighed against the increased public scrutiny that would come from a more prominent role in socially-critical areas such as small business finance and infrastructure development.
Jersey’s specialist expertise, record of innovation and supportive regulatory environment puts it in a strong position to take advantage of private markets expansion. But just as the sector as a whole must adjust to a changing world, firms in Jersey are working hard on sustaining relevance and where they can take the lead:
· Picking their spot: the most crucial decision is whether to be a scale or niche specialist player. Firms in Jersey are carefully considering what it is exactly that might make business want to come here, and how they can build on their standout capabilities.
· Challenging assumptions: Further questions centre on how to address changing investor demands. The ever-increasing risk of being called out for ‘greenwashing’ is a clear case in point. As a result, governance – the G in ESG – is rightly at the centre of the agenda. Firms in Jersey are deeply aware of the principal areas needing to be addressed, including gauging what investors really want and how to stay ahead of the game – the goalposts are moving all the time.
· Nurturing talent: Firms are committed to addressing the need to deepen skills and talent, including creating more diverse boards and stepping up the recruitment and upskilling of women.
The evolution and expansion of private markets offer the win-win of high value economic growth locally, and an opportunity to help address pressing social and environmental priorities globally.
With so much at stake, Jersey’s funds sector is focused on tracking how investor demands are changing, ensuring it can keep pace, and articulating what it can offer that other financial centres can’t.
A new report by IFI Global, supported by Jersey Finance, has been published, exploring post-pandemic fund domiciliation trends...
The rise of sustainable finance, the impact of Brexit, EU regulation and the fallout of the pandemic all have the potential to shape considerations around alternative fund domicile selection, according to new research published recently by IFI Global and supported by Jersey Finance.
Based on the views of alternative managers, law firms and advisors from across North America, Europe and Australasia, including some of the world’s largest investors in alternatives, the research for this new report – entitled ‘The Future of International Fund Domiciliation 2021’ – was carried out between October 2020 and February 2021.
More information and the full report can be found here.
Latest quarterly figures for period ending 31 December 2020 show stellar performance for Jersey's funds industry, driven by private equity...
The upward trajectory of Jersey’s funds industry continued in 2020 with the value of regulated funds business serviced in the jurisdiction growing by 9% over the year to reach a new record level, according to the latest quarterly statistics.
Figures for the fourth quarter of 2020 (ending 31 December 2020), collated by the Jersey Financial Services Commission (JFSC), show that the net asset value of regulated funds under administration in Jersey grew by £32.4bn annually to stand at £378.1bn. The increase reflects a period of sustained growth for Jersey’s funds industry, with the figure at the end of 2020 rising by more than two thirds (67%) over the last five years.
In particular, the alternative asset classes, which now represent 89% of total funds business in Jersey, continued to prove the engine room of growth, with private equity and venture capital up by 21% year-on-year to £164.6bn. In addition, the number of registered Jersey Private Funds, which are not included in the headline figures, grew by almost 100 over the year to reach a total of 403.
Meanwhile, the figures also show that deposits held in Jersey banking institutions at the end of 2020 stood at £131.7 billion, down 8% year-on-year, a reduction that was heavily influenced by currency movements and global market volatility, with 56% of deposits in Jersey held in foreign currencies.
Corporate activity, meanwhile, was also very strong in 2020, with a record level of company incorporations in the fourth quarter of 2020 and the total number of live companies on the register standing at the second highest level in ten years at the end of the year (33,626).
Commenting on the figures, Jersey Finance CEO, Joe Moynihan, said:
“Against the backdrop of a really challenging year for global markets, this is a positive picture for our industry, and for our funds sector in particular which has again achieved stellar growth to reach new record levels. The resilience and stability Jersey has shown has clearly resonated amongst investors and managers, as they have continued to put their faith in Jersey as a specialist high quality centre for alternative funds. Despite currency movements impacting overall bank deposits, material deposit levels have stayed largely stable and consistent over recent years, while the positive corporate activity we saw in 2020 is a reflection of the health of the industry and our role in supporting cross-border activity.
“Overall, thanks to the collaborative efforts of Jersey’s industry, government and regulator, we are in a strong place at the start of 2021 and stand ready to deliver on our duty as a responsible IFC and support global economic recovery in the months ahead.”
Tim Morgan, Chair of the Jersey Funds Association, added:
“Jersey continues to work tirelessly to create the ideal ecosystem for alternative funds, and these latest figures provide welcome evidence of the appeal Jersey continues to have, in particular in the private equity, venture capital and alternative space, with a number of big-ticket funds coming to market through Jersey over the past twelve months. The fact that almost 100 new Jersey Private Funds have been registered over the year is also hugely positive, underlining both the appeal of the JPF as the go-to vehicle for professional investors but also Jersey’s ability more widely to innovate in the right areas.”
Latest figures show ongoing appeal of JPF for cross-border alternative funds...
The total number of registered Jersey Private Funds (JPFs) has grown by almost two-fifths year-on-year, according to the latest figures, as the structure continues to assert its appeal for cross-border alternative fund structuring.
According to the latest quarterly statistics collated by the Jersey Financial Services Commission and published by Jersey Finance, there were 365 JPFs at the end of September 2020, a number that has risen by 37% compared to the same time the previous year.
Launched in 2017, the JPF structure is tailored to the needs of small numbers of sophisticated investors and offers high levels of flexibility, fast-track authorization and lighter touch ongoing regulatory requirements.
Meanwhile, the latest quarterly figures also show that the total value of regulated fund assets serviced in Jersey grew to a new record level of £365.6bn in the third quarter of 2020, up 7% year on year. This was driven by growth in the alternative asset classes, including private equity, venture capital, infrastructure and real estate, which saw growth of 12% over the year.
Commenting on the figures, Jersey Finance CEO, Joe Moynihan, said:
“In the context of the challenging environment for fundraising in 2020, these latest statistics reinforce the appeal of Jersey as a safe location for institutional capital, as investors have sought resilient, stable, robust, transparent and straightforward fund structuring options to continue to generate returns.
“The Jersey Private Fund in particular has become areal success story and, thanks to its speed to market, flexibility and cost-effectiveness, is now perceived as the go-to vehicle for private capital co-investment and cross-border institutional alternative fund structuring.”
Tim Morgan, Chair, Jersey Funds Association, added:
“Whilst other centres have struggled to keep up to speed as the environment has changed so quickly over the past 12 months, the sophisticated eco-system Jersey provides has proven to be hugely attractive amongst investors. The JPF is a key element of that appeal, complementing Jersey’s pragmatic regulatory environment, access to expertise, and global distribution capabilities. These figures reflect the strong position Jersey is in as we move into 2021 and continue to help investors navigate a challenging landscape.”
New white paper published by IFI Global
Earlier this month, Jersey Finance contributed to a white paper by IFI Global looking at domiciliation trends in a fast moving world.
According to the report, BEPS may well be the most important development for structuring in the alternative fund industry in a generation, with many fund managers considering their domiciliation options more closely now, in part because of the growing costs and regulatory requirements of being in certain Caribbean jurisdictions.
The full white paper can be found here.
Jersey - First for Finance 2020 - 2021
In the 12th edition of Jersey - First for Finance, JFA chair Tim Morgan explores how Jersey's funds industry is focused on honing its vision to provide the perfect ecosystem for cross-border alternative funds.
The full article and publication can be found here.
A new amendment to Jersey’s legislation will make it significantly easier for managers to migrate limited partnership fund structures to the jurisdiction...
Jersey Finance has welcomed a new amendment to Jersey’s legislation that will make it significantly easier for managers to migrate limited partnership fund structures to the jurisdiction.
The changes to the Limited Partnership (Jersey) Law 1994, which were approved by Jersey’s government this week to come into force today (17 July), introduce a new statutory basis for limited partnerships, which are frequently used for alternative fund structuring, to be migrated from other jurisdictions, providing greater legal certainty for managers and investors.
Whilst migrating a limited partnership to Jersey has been technically possible in the past, the move brings Jersey in line with the laws of other jurisdictions, making it easier for lawyers to give a clean legal opinion as to the validity of the migration of a limited partnership into Jersey from elsewhere, as the same legal entity.
Commenting on the amendment, Joe Moynihan,CEO, Jersey Finance, said:
“In an increasingly complex global alternative funds environment, managers are increasingly looking at their fund structuring options and indeed, over recent months, our funds industry has reported a rise in interest in Jersey from private equity and other alternative managers wanting to restructure their funds. They are attracted by the sort of stability, expertise, and high-quality service levels Jersey offers, whilst its strong track record in corporate governance, its ability to offer certainty around substance and its ‘whitelisted’ status are all seen as real benefits too.
“This amendment makes it easier for managers to migrate their structures from elsewhere in a quick, cost-effective manner so that they can benefit from Jersey’s ideal alternatives ecosystem. We anticipate a strong uptick in fund relocations following this amendment.”
Tim Morgan, Chair of the Jersey Funds Association added:
“The industry, regulator and government in Jersey have all worked very efficiently together to bring this amendment to fruition impressively quickly. This is a really important development, introducing an express mechanism whereby limited partnerships can migrate to Jersey quickly and seamlessly, and it will undoubtedly prove an attractive proposition for managers who are exploring how they can better navigate the complex environment they operate in. We have already seen a number of enquiries for migrations into Jersey in recent weeks.”
A FAQ about the amendments can be found here.
A factsheet about the migration of foreign limited partnerships to Jersey can be found here.