Jersey Finance: Funds Masterclass – Distribution

This live-streamed event followed the same format as our popular Masterclass series, but in a virtual format, bringing together experts in their field to discuss the latest trends impacting on fund distribution decisions.

This event covered cross-border fund raising and distribution, including the current trends and challenges surrounding Brexit, ESG considerations, AIFMD review, substance, delegation and crypto.

Event Summary: Masterclass Highlights Importance of Easy Investor Journey

With investors being absolutely key when it comes to fund domicile decisions, Jersey is focused on making the investor journey as easy as possible – something that has really come to the fore in the Covid-inflicted remote working environment.

Those were amongst the thoughts to emerge from the recent live streamed Jersey Finance Funds Masterclass, which was focused on Distribution last week (21 October) and which explored fund structuring, the impact of Brexit and other aspects of fundraising in an era defined by Covid-19.

In a panel session moderated by Niamh Lalor, partner at Ogier and head of the JFA’s legal and technical committee, panellists discussed how investors were increasingly influencing domicile choices and that having the right vehicles and regulatory environment to meet investor needs was vital.

Rob Milner, partner at Carey Olsen, pointed to the range of structures Jersey can offer to suit different investor types: “It’s now a given that, whatever structure an investor wants, it’s possible to meet those criteria through Jersey’s range of structures . This can range from the agile, quick structure like the Jersey Private Fund, to the listed and expert public funds for a wider investor base, to the hugely flexible ‘non-fund’ structure like SPVs. All of these can be marketed into the EU with the opt-in AIFMD overlay and give Jersey a good, flexible platform to appeal to investors.”

Meanwhile, commenting on the shift to remote fundraising in the current environment, Lewis Fellas, CEO, Equi Global, said: “We certainly saw this move to remote working was coming, with the idea of going on frequent business trips to meet managers coming to the end of its lifespan. As a manager, what’s key is understanding your investor demographic and having the ability to work with and speak to LPs remotely from Jersey is really important.”

Giles Johnstone-Scott, Head of Operations at Medicxi, added that the current environment had given rise to investors asking a lot more questions about the manager: “It’s been quite apt in terms of timing, as investors have been looking at managers just as you are literally testing out your business continuity plans in a live environment. They want to look under the bonnet of the GP and see how you really operate when a significant event like Covid occurs.

“At a jurisdictional level, having made use of the national private placemen regimes for several of our funds accessing Europe, Jersey has been a very easy jurisdiction to sell and has provided us with a positive experience to fundraise from since lockdown.”

Rob Milner added: “DDQs and investor led research has really gone through the roof recently, with LPs wanting to know more about the managers and funds they are putting their capital into. Having Jersey down as the fund domicile rarely raises any concerns, which is really positive reflection of investor attitudes.”
“LPs are really familiar with Jersey as a domicile, and a lot of the biggest LPs in the world have funds that are operated in Jersey,” added Giles.

Turning the sustainable investing, Tom Powell, Principal at Alnitak Advisers, said: “We’ve had a really positive story to tell from lockdown with a greenfield LP in the UK investing in one of our strategies, and we have done everything remotely with them. We’ve been able to cover everything in far greater granularity than a limited time face to face meeting would have entailed. That could actually lead to much better long-term terms relationships.”

“At a regulatory level, the Jersey regulator has seen the direction of travel towards ESG and is keen to ensure that the integrity of ESG vehicles launched in Jersey matches the integrity of the rest of the industry. We’ve had some robust discussions between industry and regulator around ESG, and that’s very pleasing.”

Looking to the future, Rob Milner pointed to the fact that the emphasis Jersey has placed on stability, transparency and neutrality over the past 30 years is now really coming the fore:

“Whatever happens in term of Brexit, Jersey stays the same. Jersey is already a third country in relation to the EU, and that won’t change. That puts Jersey in a strong position. Being a substance, transparent and neutral jurisdiction has been a lot of work for us, whilst other jurisdictions were more focused on taking the easier option. But now, they are all having to scale up to Jersey’s level. As a result, we’re seeing a real surge in fund structure and manager relocations.”

“We’re seeing a revolution in terms of how people approach their work,” concluded Rob. “Jersey, with its substance legislation, has all the necessary infrastructure in place to welcome both open-ended and illiquid managers to set up here, when they might decide they don’t necessarily need to be in London or elsewhere.”