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Magazine Issues » October 2021

Jersey roundtable: The resilience factor

Our expert Jersey-based fund management roundtable explores what has kept the jurisdiction in vogue and what must be done to maintain its status as a leading financial hub.

Jersey_roundtable_Oct_2021

Alan Baird (Head of fund services, JTC)
Charlotte Cruickshank (Global head of fund onboarding and solutions, Ocorian)
Ben Honeywood (Partner, private equity group, KPMG)
Malcolm Macleod (Head of funds and institutional, IQ-EQ)
Elliot Refson (Head of funds, Jersey Finance)
Ryan Taylor (Head of funds, Suntera Global)

Funds Europe – In uncertain times, managers and investors look for security and stability in their fund domicile. Do you think this has made Jersey more attractive?

Elliot Refson, Jersey Finance – In Jersey, financial services is the bedrock of our economy and our default is stability – both political and fiscal. We offer a minimal change outlook from a regulatory, legal or economic perspective and that basis of stability and tax neutrality is supported by world-class infrastructure. This is highlighted by the second-fastest broadband in the world, and it’s supported by broad and deep expertise and substance from the near-14,000 people who work in the finance industry within Jersey.

Malcolm Macleod, IQ-EQ – We have seen quite a lot of first-time managers coming to Jersey citing its stability. The Jersey funds regime is tried and tested and is attractive to these managers, offering something that is familiar to the LPs [limited partners] they are looking to attract.

Managers tend to work to tight timeframes, so we often see them using a regulatory hosting platform, for example in the UK, to avoid a lengthy FCA [Financial Conduct Authority] authorisation process, and then when they choose a fund domicile, they are picking Jersey for the user-friendly Jersey Private Fund (JPF) regime. This combination can really speed things up for them, and it means that they can focus on fundraising and deal origination.

Ryan Taylor, Suntera Global – Absolutely, we’ve certainly seen a few hiccups from some of our competitor jurisdictions, particularly if we look slightly further afield than the European market. In the Caribbean, we’ve seen the grey listings that have taken place for the likes of the Cayman Islands, and this really harps back to the high quality of Jersey’s regulatory regime. We never seem to really find ourselves in much danger in that regard, but for all the right reasons, we come out as the gold standard when we have our wider regulatory visits from the likes of Moneyval, etc.

This has helped in an unstable time globally, to know that we’ve got that level of certainty around Jersey as a fund jurisdiction.

Alan Baird, JTC – We’ve likely all had experience of clients being tempted to structure in other jurisdictions. It might be through LP sentiment in the fundraising process – however, I genuinely believe that once you’ve tried and tested Jersey, you’ll want to use Jersey again – particularly if you’re a promoter who can deliver a solid performance.

Charlotte Cruickshank, Ocorian – It has become increasingly difficult to find a jurisdiction that can provide a politically and financially stable environment in recent years. The rise of ESG, Brexit, evolving substance demands, and a business environment emerging from an unprecedented pandemic are all influencing domiciliation decisions. Add to this diverging attitudes between North America, Europe and Asia, and the investment landscape becomes more complex than ever.

It is little surprise then, that Jersey is a popular domicile choice for fund managers. It provides a stable environment for business, which is supported by a deep pool of investment and asset-specific expertise, robust financial services infrastructure, and progressive laws and regulations. These attributes assure investors and fund managers that their interests are in the best possible hands.

The appeal of domiciles such as Jersey as investment hubs is evident. In fact, in our global survey of alternative investment managers conducted earlier this year, 85% of respondents expect demand for offshore vehicles to increase in the next three to five years, and Jersey will likely be at the front of the queue.

Macleod – We have seen some managers who, for whatever reason, have been tempted away to other jurisdictions, only to return to Jersey for subsequent fund launches because of the unsatisfactory experiences they have had elsewhere. The tried-and-tested NPPR [national private placement regime] process means that there is often no good reason to remain outside of Jersey, making a return even more compelling.

Baird – They are the anecdotes that we, as practitioners, should be sharing with one another because it’s all about what we can do for Jersey PLC. By being more inclusive as to our successes, we give ourselves the best chance of bringing in new business. New business is the lifeblood.

Ben Honeywood, KPMG – Resilience has really supported the continual growth of an ecosystem here in Jersey. Possibly most importantly, managers are either increasing their existing footprint in Jersey, or coming here lock, stock and putting boots on the ground.

We’ve seen a real increase in physical presence over the past 18 months, and that’s largely because of the resilience of the island.

The softer things are the ultrafast broadband, the ability to work remotely, bring over and/or develop a business here, and it’s really made the ecosystem much richer than just being perceived as a back office. That has really made the future trajectory of the funds environment in Jersey quite exciting.

Refson – One thing that I can measure in real time is the number of limited partnerships created. There was only really a dip in April of last year. We had a record number created in the fourth quarter of 2020. The number created this year is 70% above the five-year average.

We are winning private equity business and managers because they are seeing others come to Jersey, so it’s starting to become self-perpetuating after many years of hard work by the whole industry.

Taylor – Jersey maintains its favourable reputation in these markets. What we’re also seeing is that many of our competitive jurisdictions are having issues here and there, for example from a resource perspective and struggling to get the right people to do the work when the work comes in.

We have a much more stable infrastructure on the whole here in Jersey, as not only do we have quality administration, but we have expert auditors, lawyers, accountants, and everybody works together. There is a very collegiate feel to Jersey’s funds industry and the wider finance industry.