Jersey well placed to capitalise on global private market trends
Global private market dry powder (sums that have yet to be invested) reached a record high of $2tn in June 2018, doubling in the six years since December 2012 (Preqin).
Following a record year in 2017, fewer funds closed in 2018, with a reduction in capital raised from $925bn in 2017 to $757bn in 2018. A record 5,147 funds were in market as at January 2019, up 47% year on year, targeting $0.5tn in capital. Institutional investors in private markets have increased from 3,500 in 2008 to over 11,000 today.
The private market has evolved in recent years, with a shift in growth towards infrastructure and real asset funds.
The infrastructure fund market is booming. Increasingly, mega funds dominate the field with two funds, Brookfield and Global Infrastructure Partners, targeting enough capital to match half the entire funds raised in 2018.
Europe has been the largest focus of all infrastructure deals with 859 deals completed in 2018 at an aggregate value of $152bn. North America is the second largest with 801 deals at an aggregate value of $78bn.
With fund raising set to continue, Jersey is well placed to benefit from another bumper year in 2019 – figures for the end of 2018, for example, showed that private equity fund values in Jersey rose by 38% over the year to cross the £100bn mark.
And there are good reasons for this - Jersey offers stream-lined regulatory products (the recently introduced Jersey Private Fund enables funds with up to 50 investors to avail of a fast-track authorisation process and lighter ongoing regulatory requirements), tax simplicity, together with high quality, and mature tested solutions to support substance requirements.
In addition, marketing access to the EU market is tried and tested through the use of EU private placement regimes, and is combined with entirely AIFMD-free marketing to investors outside the EU.
Leading global managers in alternatives continue to structure their products through Jersey (eg. CVC Fund V11 - Europe’s largest private equity fund - and the Softbank Vision Fund – the world’s largest alternative fund – were established in Jersey in 2017), demonstrating global investor familiarity and confidence in the jurisdiction.