Strong uptake in Jersey private placement regime in run up to end of AIFMD transition
With less than one month to go until the transitional phase of the EU Alternative Investment Fund Managers Directive (AIFMD) comes to an end, Jersey is seeing a strong take-up in its private placement route into Europe.
Figures from the Jersey Financial Services Commission (JFSC) show that more than 70% of the 52 funds registered so far this year in Jersey have been approved to market into the EU under the AIFMD through Jersey’s private placement regime.
In addition, according to the JFSC, a total of 43 funds have so far been registered to market into the EU whilst 38 fund service providers have also been approved to conduct AIFMD related business under the regime.
Recently it was reported that the AIFMD has not been fully transposed by a third of EU Member States, whilst at the end of the third quarter of the year it was reported that more than half of UK alternative fund managers had not applied for AIFMD authorisation.
Jersey’s framework under the AIFMD means that there are options to gain regulatory approval to market into Europe ranging from a same day turnaround to up to ten working days, depending on the type of fund being registered. The application fee for a fund or a fund services business to be registered with the JFSC to privately place into Europe under the AIFMD is £1,000, with exceptions for Certified Funds or Recognized Funds and fund services businesses registered under Article 2(10) of the Financial Services Jersey Law or Recognized Fund Functionaries, which are not required to pay an AIF application fee.
At Jersey Finance’s Annual London Funds Conference this year, 33% of attendees indicated that they anticipated particular growth in real estate this year whilst 27% said they saw most potential in private equity. This picture is manifesting itself in Jersey with the uptake of European-focused funds including a number of landmark funds, such as the largest ever real estate fund to be listed on the London Stock Exchange (the Kennedy Wilson Europe Real Estate fund, which raised around £1 billion and will target investments in European real estate linked assets).
Jersey law firms and service providers have also reported registering funds targeting assets such as Scandinavian medium size firms, commercial property in the UK and Europe, cleantech and energy.
Geoff Cook, CEO of Jersey Finance, said:
“Even at this late stage, managers are still cautious about the AIFMD and its impact on their operations and cost-base, and these figures from the JFSC provide evidence that Jersey’s private placement route is being warmly received by the market as an attractive flexible, robust and cost-effective option. Given Jersey’s specialist expertise in fund governance, we expect this trend to continue as those managers marketing into Europe look to avail themselves of Jersey’s attractive private placement option beyond 22 July.
We are also seeing a rise in the number of managers considering establishing a presence here. There are more than 300 registered resident directors in Jersey who are able to take on actual portfolio management and risk supervision duties and 1,400 regulated funds, which means that on average each director is overseeing less than five funds, so demonstrating substance for a Jersey manager is extremely straight forward.”