Geoff Cook, Chief Executive, Jersey Finance, says offshore is very much alive as he looks at the development of Jersey's AIFMD landscape.
The end of the transitional period for AIFMD implementation is in sight, and it’s a critical time for fund structuring with managers currently exploring the long-term options open to them.
From Jersey’s perspective, the AIFMD has been turned into an opportunity, by offering stakeholders three potential options:
• A ‘business as usual’ option, with no AIFMD impact for Jersey funds marketing outside the EU or whose EU marketing has been completed
• An EU private placement option, with limited AIFMD reporting and disclosure requirements for Jersey funds marketing into the EU
• A fully AIFMD-compliant option for Jersey funds marketing throughout the EU as soon as third country passporting becomes available
A great deal of hard work has gone in to establishing this ‘future proof’ model, and the initial reaction is encouraging - a number of landmark funds have been structured through Jersey recently, involving both European and non-European assets and investors.
In addition, an increasing number of major asset management businesses and service providers are establishing a presence or expanding in the island, such as CVC, Ardian, Brevan Howard and Apex Fund Services (Jersey) Limited.
Where marketing into the EU is concerned, ‘offshore’ is very much alive. Having signed 27 bilateral cooperation agreements with EEA countries, Jersey’s regulator (the Jersey Financial Services Commission) is currently granting licences for fund managers actively targeting European markets through private placement arrangements.
Jersey was also the first third country to offer managers a fully compliant AIFMD option, meaning that Jersey has an ‘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 anticipated from July 2015.
The feeling is that there is a specific opportunity for UK fund promoters to use Jersey as part of a ‘wait and see’ strategy, giving them time to assess the full impact of the AIFMD.
In the face of increasingly complex reporting requirements under AIFMD, we also anticipate a growing demand from managers to outsource their administration requirements to experienced Jersey administrators too.
Meanwhile, a greater amount of non-European fund activity is currently being channelled through Jersey, and a rise in the number of Jersey funds targeting growth markets across Russia, Africa and Asia is anticipated this year. For this reason, it has been important for Jersey to offer a regime that is fully outside the scope of the AIFMD.
In fact, at our recent Annual Funds Conference in London, the audience of funds professionals indicated in an informal poll that they anticipated most growth in the real estate (33%) and private equity (27%) asset classes – with most opportunities (42%) coming from outside of Europe, particularly Asia.
This is manifesting itself in Jersey, with a number of major real estate funds being structured recently – including the largest ever real estate fund to be listed on the London Stock Exchange, the Kennedy Wilson Europe Real Estate fund, with a capital raise of over £1bn.
Whilst managers are still cautious about the AIFMD, there are real solutions both in and outside of Europe, and Jersey is undoubtedly a very attractive one.
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