To print this article, all you need to do is be registered or log in to Mondaq.com.
There are four main reasons Jersey’s private fund structure has become an island success story, says Tatiana Collins, Senior Counsel at Walkers’ Jersey Investment Funds and Corporate Practice Group.
Launched five years ago, the Jersey Private Fund (JPF) has dramatically simplified Jersey’s offering for fund products, resetting regulatory requirements for fund managers who do not raise funds from a large number of investors (i.e. less than 50 investors) and only target sophisticated investors. investors.
The reforms have been a huge success – over 530 JPFs have now been registered since the scheme was introduced in April 2017, part of the island’s success story which has seen the net asset value of alternative investment funds reach $555.7 billion in the fourth quarter of 2021 (boosted by private equity and venture capital growth of 27% over the last 12 months).
From our experience presenting the JPF to managers and law firms, here are four reasons why it works.
- Access to Europe: European Commission statistics show that 97% of funds marketed in Europe have raised funds from three or fewer jurisdictions in the EU, which in effect means that the route of the national private placement regime ( NPPR) that Jersey funds follow to market in Member States is a valid alternative to the more costly, onerous and complex passport route under the Alternative Investment Managers Directive (AIFMD). It is also relevant in this regard that 62% of European investors in private equity funds come from the UK, Switzerland or the Netherlands. Two of these countries are not part of the EU and have (or will have) their own rules for the distribution of fund products in their territory.
- Regulation: NPPR offers a proven route that will almost certainly be faster and cheaper than a full onshore AIFMD model. The Jersey regime is built around the Jersey AIF – or “Alternative Investment Fund” – Code of Practice which incorporates some of the key provisions of the AIFMD but does not require full compliance with it. In particular, a Jersey AIF with a Jersey alternative investment fund manager need only comply with the relevant sections of the AIF Code, namely in relation to disclosure, reporting, transparency and (where applicable) asset stripping.
- A clear path: In recent years managers such as Softbank, CVC, Triton and Nordic Capital have set up private funds in Jersey. It remains the jurisdiction of choice for a number of large private equity firms.
- Proximity to major hubs: Being 45 minutes from the City of London does not hurt Jersey’s fund offering. The adjacency of time zones, the common language, the attitude to work and the company laws based on the English model that onshore boards are familiar with are all positive factors.
This combination of selling points has made the JPF work, not only for Jersey’s existing base of experienced fund managers, but also as an option for club deals, family offices and as part of the private wealth structuring toolkit, blurring the lines between funds and private funds. Capital city. And if fund managers are looking for new opportunities, there is also the possibility of converting a JPF into a more public Jersey fund product, including the ‘Expert Fund’, at a later date.
From the perspective of a Jersey funds lawyer, the JPF has made the last five years more varied, more exciting and more productive – there is no reason this should change in the years to come.
This article was first published in Funds Europe in June 2022.
The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.
POPULAR ARTICLES ON: Jersey Finance and Banking