Member Update: Funds

• Download presentation slides
• Read a synopsis of Elliot Refson’s presentation on funds sector performance and Jersey Finance activity in the sector
• Read a synopsis of Peggy Gielen’s presentation on the legal and technical team’s work in the sector, including progress on introducing Jersey LLCs
• Watch the presentation by Philip Pirecki on ‘The US Opportunity’
• Get in touch with our Jersey Finance funds sector team

Opening the event, Elliot gave an overview, looking both backward and forwards and on a macro level, in terms of the growth of the funds industry in Jersey, and micro level, considering the role we play as part of the large mosaic that makes up the industry on the island.

In examining more closely the headline figures available from the JFSC Elliot discussed the increasing Assets Under Management (AUM) yet decreasing fund pools seen, making the following points:

• With close to 500 Jersey Private Funds (JPFs) having been created to date, this is the fund of choice and this can take the form of many vehicles, for example Limited Partnerships (LP). Adding in corporate vehicles and taking the example of LPs (which are easily quantifiable) to the figures shows a very different picture on the matter of decreasing fund pools
• The number of LPs created in 2021 is 77% above the five-year average and at record levels, building on an acceleration which started in mid-2020
• The trajectory of LP growth is already significant, and past data suggest there is always a significant spike in the last quarter
• From AUM figures it is clear growth is strong – year on year growth to June 2021 at 20.5% is the fastest in the past 10 years
• These figures would be stronger still if they included JPFs at 21.7% year-on-year or 130% over five years (the slides show aggregate AUMs including JPFs – please note these are for internal purposes only and are not usually aggregated in the quarterly figures available on our website)
• The clear inference from these trends is one of significant and accelerating growth, and from the registry we can see this is being driven by new entrants to the market, and not just a small number of larger managers, as it was previously.

Elliot then went on to compare Jersey to Luxembourg, highlighting how percentage growth in Jersey is outpacing that of Luxembourg over the past three and a half years.

Turning then to the role Jersey Finance plays, two years ago we set out to reinvent our funds footprint, align with Jersey Funds Association (JFA), build in our key and mature markets while also diversifying through asset class, geography and specific pockets of opportunity. Some key milestones in this activity have been:

• Through the Masterclass series in London we have so far reached over 5000 asset specific professionals and added over 900 to our database
• Through our global Business Development team, we have in each jurisdiction extrapolated their amazing networks to take our funds message to market
• In South Africa specifically, we have already seen one of the top 10 South African managers relocate to Jersey and see a strong pipeline
• In the US, we opened our New York office – for more information on the US opportunity, you can watch the speech by Philip Pirecki, our Business Development lead in the Americas, in this video
• We continue to make inroads across Asia and the Middle East

Looking forward, a significant development in 2022 will be the Limited Liability Company (LLC) laws, of particular interest in our US market.

Peggy’s presentation covered the legal and regulatory funds work by Jersey Finance, working with industry, Government and the Jersey Financial Services Commission (JFSC), to ensure that Jersey’s legal and regulatory framework for funds stays current and that Jersey continues in its role as a fund domicile of choice.

The high quality of Jersey’s regulatory framework is of great appeal to fund managers and the importance of this is increasing. The regulatory and tax framework and the type of expertise that is required to service alternative investment funds cannot be built overnight and there is a real opportunity for Jersey to benefit from its expertise for alternatives, its expertise in governance, as well as being a tried and tested route under NPPR (National Private Placement Regime) for reaching EU investors. The latter is also important in light of the premarketing rules that came into force in August 2021, especially where Jersey is able to act as a gateway into Europe for fund managers that are based in markets that have typically relied on reverse solicitation, like the US.

Limited Partnership Law

In 2020, we were able to move fast on legislative changes to allow non-Jersey limited partnerships to migrate to Jersey. This opportunity was acted on fast when Cayman introduced their changes to private funds, made changes to their AML requirements and appeared on the FATF grey list.

In 2021, we committed to continue our work on further changes to our Limited Partnership law to make it more modern and best in class. Indeed, recent enhancements in this area by other leading funds jurisdictions further highlight how important it is for Jersey to keep pace. We are in a position to bring these improvements in, subject to consultation.

Limited Liability Companies (LLC)

LLCs are most commonly associated with the United States, but in recent years we have seen a proliferation of the LLC into other jurisdictions. In September 2018, Jersey adopted the Limited Liability Companies (Jersey) Law 2018, and in 2020 the States of Jersey approved a further set of amendments to the LLC Law to make the law more attractive to our target markets.

Over the past year Jersey Finance has been working with all stakeholders on the LLC Regulations which will make the Jersey LLC operational and marketable.

There are three sets of Regulations:

• Draft Limited Liability Companies (Consequential Amendments) (Jersey) Regulations 202-
• Limited Liability Companies (Winding Up And Dissolution) (Jersey) Regulations 202-
• Limited Liability Companies (General Provisions) (Jersey) Regulations 202-

With a target lodging timeframe of early in 2022, so that they can be debated and approved by the States before purdah, the LLC Law, the amendments to the LLC Law and the LLC Regulations will be brought into force by Appointed Day Act for which a date is to be decided.

Further information on LLCs will be available from Jersey Finance in due course.