For several decades Jersey firms have been building links with markets across the GCC, so that today Jersey provides a vital role in supporting family succession planning and facilitating global investment strategies on behalf of investors in the region.
These positive links have been developed thanks to the combined, forward thinking, efforts of Jersey’s regulator, government and finance industry, all of whom have visited the region for a number of years. For its part, Jersey Finance established an operation in the UAE more than six years ago to work together, more closely, with key stakeholders on the ground.
What has become clear is that, against a backdrop of shifting markets and a changing global political landscape, investors in the GCC continue to find genuine appeal in the expertise, substance and stability Jersey can offer as an international finance centre (IFC), as well as its range of tried-and-tested wealth products – not least its world-renowned trust, foundation and company vehicles and Shari’ah-compliant services.
The indications are that investors in the GCC are increasingly likely to need this sort of specialist cross-border support in the future too. According to the Boston Consulting Group, private wealth in the GCC is set to reach $12 trillion by 2021, growing at a rate of 8.1% – compared to the global average of 6% (‘Global Wealth 2017: Transforming the Client Experience’).
Jersey is ready to support this trend, offering GCC investors a safe, neutral and attractive platform and enabling them to create a certain future by carrying out their increasingly sophisticated wealth planning and investment strategies.
The need for this kind of specialist support was evidenced only last year in a white paper, published by Jersey Finance in conjunction with Hubbis, which identified some fundamental challenges HNW individuals in the GCC will face in the coming decades.
In particular, a survey for that paper revealed that more than half (55%) of professionals working with family businesses in the GCC saw succession planning as the most critical issue for GCC families today.
However, whilst HNWIs in the GCC clearly acknowledge the importance of succession planning – which can be extremely complex given the global nature of families and their businesses – there is still a reluctance to engage with third-party support and a tendency to default to deferring succession decisions – something that could prove costly in the long-run.
According to the research, for example, there are real misconceptions around the issues and solutions available when it comes to wealth structuring. Over half (56%) of GCC-based advisers said that loss of control is the biggest misconception that GCC families have when it comes to wealth structuring, whilst 23% are concerned by the lack of transparency of structures.
Although this offers some considerable challenges for wealth professionals in the region, it also highlights just how important it is for professionals with first-class experience in forward-thinking IFCs like Jersey, who are used to managing complex cross-border financial flows, to work with families and investors to bring clarity, build understanding and instil confidence.
Jersey is already focused on providing this critical support by working with advisers and investors in the region. Consequently, firms in Jersey are seeing an uptick in the number of private wealth vehicles being re-domiciled to Jersey from less advanced jurisdictions, as investors seek a high-quality trusted solution.
Flight to Quality
Whilst Jersey has earned a reputation for specialist private wealth work in markets across the GCC, this has expanded in recent years so that today there are in excess of 40 Jersey firms active in the region who are undertaking a broad range of investment and corporate as well as private wealth work.
For instance, Jersey is highly regarded for outbound commercial real estate investment, an increasingly attractive asset class for GCC investors, thanks to its stability and flexible structures for pooling capital and acquiring and selling such assets, focusing on the UK as well as Europe and the US.
Additionally, GCC institutional investors, led by sovereign wealth funds (SWF), are looking more and more at opportunities in markets such as the UK, US and Europe and as a result, Jersey fund practitioners are seeing rising levels of capital from institutional investors – the world’s largest private equity fund, structured through Jersey, has a GCC SWF as a primary investor.
Jersey’s proposition and expertise in alternative fund servicing, together with its ongoing seamless access to European markets and strong ties to the UK, lends itself well to this trend, with direct investment, co-investment, private equity and club investment deals all amongst the favoured investment strategies for GCC investors. Indeed, the jurisdiction has seen a number of major private equity and real estate fund launches involving GCC investors over the past twelve months.
Jersey’s relationship with the GCC is evolving as Jersey seeks to provide a robust and attractive platform for investors to pursue their family wealth and outbound investment strategies.
Whilst there is undoubtedly appetite amongst families to tackle succession planning to future-proof their complex family wealth and assets, it’s clear that investors are also increasingly turning to expert advisers for specialist support to put their capital to work in increasingly diverse markets and sectors.
Jersey offers welcome experience to meet this need, guiding investors through the complexities of their ambitions, and working with them to realise a positive future.
Jersey: 10 key strengths
- 50 years’ experience in private wealth management
- Deep ties to the GCC, with expertise in Islamic finance
- Early adopter to the latest transparency standards
- Glowing recommendations from the OECD, World Bank, IMF and MONEYVAL
- A substantial network of top-level financial services professionals
- An enviable community of support services, from legal to accounting
- Innovative products – from trusts to foundations, private trust companies and family offices
- Stable location
- Close ties to London
- The perfect blend of the transparent and the confidential