Jersey’s forward looking approach, commitment to first class service and focus on creating an ideal ecosystem for alternative investments, are among the factors that have enabled Jersey’s funds sector to thrive and maintain its position as one of the most robust elements within Jersey’s range of financial services into 2022.
Figures from the Jersey Financial Services Commission (JFSC) show that Jersey’s funds industry reached new record highs of total regulated assets under administration in 2022, approaching £460 billion, a clear indication of the appeal of Jersey’s platform for supporting alternative fund managers.
This figure does not include assets held in Jersey Private Funds (JPFs), of which more than 500 have been established since their introduction in 2017, underlining its appeal as an alternative fund vehicle of choice and significantly bolstering the total value of Jersey’s funds sector even further. Now in its fifth year, the JPF structure has seen 38% year-on-year growth – it is quick, relatively inexpensive and suits small numbers of sophisticated investors, with smart regulation where it matters.
Further data shows that there are now 374 alternative investment funds, including private equity, venture capital, real estate and infrastructure, being marketed into the EU via private placement regimes through Jersey – a rise of 47% over the past five years. In addition, more than 200 Jersey-registered alternative managers now market their funds into the EU through private placement – representing growth of 58% over the past five years.
It is clear that managers are responding positively to Jersey’s private placement option, which holds particular appeal for those who do not require a full onshore EU presence: around 97% of managers, according to the EU’s own figures.
As investors continue to navigate a challenging landscape, Jersey’s funds sector is in a good place, with global trends supporting the future outlook of our industry, as investors place more focus on areas where we have particular expertise and experience.
Private equity, venture capital and real assets are at the heart of global economic rebuilding efforts and are alternative asset classes where Jersey has market-leading expertise. We fully expect to see rising allocations in this space over the coming years from both institutional and private investors.
EVOLVING LANDSCAPES
Stability and certainty are at the heart of Jersey’s funds proposition but as the global investor landscape continues to shift following the uncertainty caused by the pandemic, Jersey’s funds sector is also focused on innovation and remaining agile.
In order to continue to adapt to the ever-changing environment and maintain our growth trajectory, we are prioritising innovative practice, digital adoption and a commitment to sourcing the best talent.
In terms of regulation, the regulatory environment we have created here is entirely geared towards high quality alternatives work and we have a strong track record when it comes to evolving and enhancing our ecosystem for alternative funds.
For instance, this year, Jersey introduced new amendments to its limited partnership (LP) legislation to make it easier for managers to migrate LP fund structures to the jurisdiction. These amendments are designed to modernise the jurisdiction’s regulatory framework in light of developments in the international funds environment.
This move builds upon previous amendments made to the LP legalisation back in 2020, which were highly successful in prompting managers operating in a number of other locations to make use of the new regime to redomicile or migrate their structures to Jersey. Also, these latest amendments are now a further demonstration of our innovative approach and our ambition and capability to support high quality private equity and wider alternative fund structuring.
We are also well positioned in the rapidly growing – and interdependent – arenas of digitalisation and ESG. Jersey has a clear sustainable finance vision and is laying the groundwork to build upon our existing ESG measures and initiatives.
Sustainable finance – and particularly impact investing – is experiencing significant growth on a global scale and Jersey has been active in this vital area for some time, which has seen increased attention in light of the pandemic.
Digital adoption, meanwhile, is one of the most powerful tools in enabling our sustainable finance efforts, whilst also driving innovation in other areas. Digital transformation will continue to be pivotal to the core operation of funds businesses in Jersey, from our core fund services businesses through to legal practices and management entities, shaping approaches to regulation, tax and governance over the coming years and we are dedicated to pursuing the correct approach now in order to pave the way for future success.
As a jurisdiction with over 60 years of experience and a proven ability as specialists in putting cross-border capital to work in global markets, Jersey takes its responsibility to support sustainable global recovery seriously. It is clear that the emphasis and attention on sustainable finance will only increase in the coming years and Jersey’s funds sector is well positioned to be at the forefront in this space.
DIVERSE REACH
Jersey’s efforts to nurture global contacts have resulted in an increasingly diverse market reach and there is no doubt that its ability to offer seamless, efficient access to investor markets around the world will become an increasingly significant part of its cross-border funds platform – particularly against a backdrop of global economic volatility, geopolitical uncertainty and social and digital disruption.
In a European context, for instance, Jersey’s long-established ability to offer easy access to the EU market through its flexible private placement regime under AIFMD is a case in point. It allows us to support non-EU (including UK) managers seeking access to EU investor capital and we are already ESMA-approved for future AIFMD passporting.
Meanwhile, Jersey is increasingly playing a role in connecting managers and investors further afield. Our prime setup as a European time-zone hub, outside of AIFMD rules, that can offer a stable, straightforward, transparent environment, with superior standards of governance, is inspiring increasing interest from managers in the US, the Middle East, Africa and Asia, who are now frequently turning to Jersey as their first choice of jurisdiction.
Whilst Jersey’s focus continues to be on showcasing its proposition to an increasingly diverse alternative fund manager and investor audience, that is not at the expense of its commitment to upholding its reputation as a specialist, reliable, service-driven centre of excellence.
By focusing our efforts on key areas, including upskilling, digitalisation and product enhancement, whilst maintaining a focus on diversifying our global reach and deepening our commitment to sustainability, Jersey’s funds industry has continued to support Jersey’s overall vision as a market leading IFC and at the same time play a pivotal role in supporting global economic recovery.
