US INSIDE VIEW: A strategic friendship

Rhea-HoodWhether they are setting up property unit trusts or alternative investment funds, US asset managers have often chosen Jersey as a domicile. Rhea Hood, director, private equity at Sanne, examines how this relationship will develop in future.

Jersey is known for its regulation, fiscal neutrality and service providers. Investor confidence in the jurisdiction continues to be strong and Jersey’s promotional agencies have been active worldwide.

The adoption of the Alternative Investment Fund Managers Directive (AIFMD) in Europe has undoubtedly led smaller financial centres such as Jersey to review their offering to ensure that they are flexible and nimble enough to adapt to the changing times.

Jersey has seen significant interest from non-European investment managers, including those based in the US, wanting to raise money in the European Union from a select number of member states. Jersey offers an alternative to the full AIFMD-compliant product from within the EU which is not only more cost-effective, but is often much quicker to market. While the individual national private placement regimes remain in force in the individual member states within Europe, Jersey’s position remains strong.

Recent experience has shown that US managers are opting for parallel AIFMD-compliant vehicles when raising capital globally. When the EU grants a third-country passport to Jersey, it will be well positioned to be a jurisdiction of choice for these parallel structures.

Timing of this is still uncertain, however Jersey remains top of the list of third countries that do not have significant obstacles to being granted the marketing passport. Until then, Jersey funds can continue to be marketed under national private placement regimes in most member states.

Sanne’s alternatives business continues to see interest from US managers investing in real estate through Jersey property unit trusts as well as establishing alternative asset funds to market to a select number of EU countries, as drawn on earlier.

In recent months there has been an increase in unregulated single deal structures established by US managers, whether they be very private fund structures or special purpose holding structures.

Jersey has in the past attracted high-profile US managers to the island and the relationship with US advisers remains strong through engagement with US investors who are investing into structures set up by UK/European managers using Jersey. Jersey’s links to London are strong and mean the island can act as a stepping stone to more international markets.

Sanne has seen, through its acquisition of a New York-based business, an increase in jurisdictional cross-selling and structuring by its global client base. We see the funds market continuing to grow now more than ever. We also see international financial centres of excellence like Jersey continuing to have a significant foothold in this global market, with their ability to adapt and provide flexible solutions to investment managers around the world. Jersey will continue to be a reputable and significant solution for investment structuring in the future.

With the geopolitical landscape currently breaking all the moulds, Jersey’s stable political environment offers a safe harbour in these uncertain times.

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