More alternative investment funds being marketed in EEA

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MORE alternative investment funds in Jersey are being marketed to investors in the European Economic Area than ever before, according to the latest figures from the Jersey Financial Services Commission.

These show that 374 private equity, venture capital, real estate and infrastructure funds were marketed in Europe through the EU-approved back door of National Private Placement Regimes. That is an increase of 9% in six months and 47% over five years. The number of Jersey investment managers approved to market AIFs in Europe through private placement also increased by 2% to 201 in six months and 58% over the five years.

The EU’s Alternative Investment Fund Managers Directive was introduced following the global financial crisis of 2008 which was partly caused by very risky investments such as hedge funds. The NPPR came in shortly afterwards as a mechanism for funds approved in centres such as Jersey to be marketed in EU member states where the Island has a bilateral agreement.

Elliot Refson, head of funds for Jersey Finance, said that the growth trend had been seen soon after the introduction of AIFMD.

‘Growth has in more recent years been driven by Brexit as non-EU managers, including UK managers, have sought a robust domicile to support their EU-fundraising activity, but this is not solely about Brexit,’ Mr Refson said. ‘US managers are also now very aware of the appeal of private placement, and we are seeing lots of activity in that space too.’

Mr Refson said that managers found the private-placement option Jersey provided appealing.

‘It’s tried and tested, it’s familiar, it’s robust and it’s highly cost-effective. For managers who don’t need blanket EU coverage and therefore don’t need a full onshore EU presence – and EU figures indicate that’s around 97% of managers – private placement remains an attractive option. This is reflected in the steady increase we have seen over a number of years now,’ he said.

Tim Morgan, chairman of the Jersey Funds Association, said that his industry was focused on creating the very best ecosystem for investors and managers and facilitating the global distribution of capital securely and efficiently.

‘That these figures show a near 75% increase in funds business over the past five years is testament to the fact that investors right across the alternatives spectrum recognise Jersey as a top-tier jurisdiction, offering expertise, innovative structuring options and a no-nonsense regulatory environment that is entirely geared up to supporting their endeavours,’ he said.

According to the latest figures, Jersey was administering just over £450bn of fund assets at the end of 2021 with nearly 90% in alternative assets. There were 713 registered collective investment funds and 531 private funds where professional and other eligible investors do not need fully-regulated products.

Guernsey offers similar investment fund structures which at the end of last year had attracted £304bn in 843 funds.

According to the JFSC figures, other parts of Jersey’s finance industry also remained buoyant.

The total value of deposits held in Jersey banking institutions increased marginally, by £1.9bn (1%) to £133.5bn over 2021, with 56% held in foreign currencies.

Corporate activity also remained strong last year, with levels of company incorporations achieving the highest-ever year-end number of live companies on the register at 34,523.

Jersey Finance chief executive Joe Moynihan said that, overall, the figures were positive, adding: ‘The message is clear – investors and institutions value the certainty, stability and expertise Jersey offers in an uncertain landscape. These figures should give us optimism for the year ahead as we continue to innovate and deliver high-quality services to global investors.’