Jersey has long held significant appeal as a domicile for the management and administration of alternative funds, attracting a number of venture capital, private equity, mezzanine, real estate and hedge funds.
A rise in high value real estate and private equity funds targeting UK, continental European and global assets have been structured through Jersey in recent months, providing evidence of Jersey’s increasing appeal as an alternative investment funds domicile. This is due, in no small part, to Jersey’s approach to EU regulation, particularly the EU Alternative Investment Fund Managers Directive (AIFMD).
It’s clear that, in a post-AIFMD landscape, what managers require above all else from their domicile is a combination of certainty and flexibility. This has been borne in mind and is reflected in Jersey’s three-pronged response to the AIFMD that allows funds to be marketed into the EU through national private placement regimes, with the option of an EU-wide passport as anticipated from July 2015, or to the rest of the world through existing regimes outside the scope of the AIFMD.
Jersey was also the first third country to offer managers a fully compliant AIFMD option, meaning that Jersey has an anticipated ‘opt-in regime’ for managers wishing to comply fully with AIFMD requirements when marketing to European investors, with the use of an EU-wide passport expected from July 2015.
In comparison with onshore, Jersey’s AIFMD regime is incredibly competitive, with regulatory approval for private placement under AIFMD including options which can take from between just three and ten days, depending on the structure.
It has also been important for Jersey to offer a regime that is fully outside the scope of the AIFMD, which can cater for an anticipated rise in the number of Jersey funds targeting growth markets across Russia, Africa and Asia. As wealth is created in the growth markets, investors are looking for jurisdictions with structuring expertise, respect for the rule of law, use of a common business language, time zone convenience and protection of property rights.
The private equity community has seen a number of major asset management businesses and service providers establish a presence or expansion in Jersey recently. Further, a number of landmark private equity and real estate funds have been structured through Jersey, involving both European and non-European assets and investors, including the largest ever real estate fund to be listed on the London Stock Exchange.
Despite the onslaught of complex regulation and managers still being cautious about the full impact of AIFMD, there are real solutions. Flexibility, expertise and clarity are absolutely key for fund managers and Jersey is extremely well placed to offer these qualities and provide managers with a compelling long-term solution.
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