5 FAQs about setting up a private markets fund in Jersey
Jersey, with its robust regulatory framework and attractive fiscal policies, has long been recognised as a premier jurisdiction for fund establishment.
In this article, Michael Adams, Helen Wetherall, and Nick Terry from Ocorian’s Jersey Fund Administration Team delve into the unique advantages and opportunities that Jersey can offer to asset managers and investors.
What does Jersey’s regulatory environment look like?
Jersey's location outside the European Union offers unique advantages. This positioning allows a broader variety of fund managers to operate without the regulatory complexities often encountered within the European Union.
Jersey is not part of the United Kingdom but is a self-governing dependency of the Crown. Despite its proximity and historical ties to the UK, Jersey maintains a distinct regulatory identity, provides it with autonomy over its own financial regulations, making it a favourable environment for fund setup.
The Jersey Financial Services Commission (JFSC) is the regulatory body overseeing all financial services on the island. Funds in Jersey are not required to have Alternative Investment Fund Managers (AIFMs) and depositories, which simplifies the compliance burden compared to other EU on-shore jurisdictions.
What types of private fund structures are available in Jersey?
Jersey offers a variety of private fund structures to cater to different investment strategies and investor needs. These include:
Expert funds: Suitable for funds with a complex investment strategy or those targeting a specific investor base, expert funds require a higher level of regulatory oversight. Designed for professional or experienced investors, with a fast-track approval process.
Listed funds: Designed for funds seeking a public listing, this structure involves stringent regulatory requirements and disclosure obligations.
Private funds: This is a popular choice for funds targeting a limited number of sophisticated investors. The Jersey Private Fund (JPF) caters specifically to smaller or newer fund managers, allowing for rapid setup and market entry. The JPF framework is highly flexible and has been effectively used across various asset classes, including real estate and infrastructure.
Notification only fund: This structure provides even greater flexibility, as it requires only a notification to the Jersey Financial Services Commission (JFSC) rather than a full authorisation.
Retail funds: Open to a broader investor base, including the general public.
What are the benefits of using Jersey as a funds domicile?
Setting up a fund in Jersey comes with some distinct advantages over other European jurisdictions:
Tax neutrality: Jersey funds benefit from a tax-neutral environment, meaning no capital gains, inheritance taxes, or value-added taxes are imposed.
Jersey's strong regulatory framework The Jersey regulator, the Jersey Financial Services Commission (JFSC) is well-respected and provides a stable environment for launching and managing funds. MONEYVAL concluded “that Jersey’s effectiveness in preventing financial crime is among the highest level found in jurisdictions evaluated around the world”,
Speed to market is another attractive feature. The Jersey Private Fund, designed for smaller funds, offers a quick turnaround time, typically within 48 hours allowing managers to rapidly set up and launch their funds. This efficiency is partly due to the regulator's light-touch approach and speed to market.
Political and economic stability: Jersey’s stable political climate and strong economic policies make it a safe haven for investors.
Professional infrastructure: The island boasts a sophisticated financial services industry supported by expert legal and accounting services.
Investor familiarity is another key benefit. Jersey's well-recognised structuring and long-standing relationship with investors globally contribute to a high degree of comfort and trust among fund managers and investors alike. This familiarity can facilitate fundraising and investor relations. The familiarity and comfort that investors have with Jersey's fund structures contribute to its reputation as a secure and reliable place to invest.
What type of investor assets does Jersey attract?
The jurisdiction has a long-standing reputation in real estate, shipping, and aviation, attracting a substantial market for funds investing in these asset classes. Over the years, Jersey has not only maintained its strength in traditional sectors but has also adapted to emerging sectors like renewable energies. This evolution reflects Jersey's ability to stay relevant and attractive as a fund jurisdiction amidst changing global economic landscapes.
The jurisdiction's appeal is not limited to any specific region; instead, it draws firms globally, establishing Jersey as a hub with a truly international investor base. Jersey has forged strong connections with investors from the UK, Europe, the US, and various parts of Asia.
Jersey is also renowned for its focus on professional investors, offering a robust yet agile jurisdiction that is not typically suited for retail or smaller investment tickets. These investors frequently utilise Jersey's financial structures, such as the Jersey Private Fund (JPF) to make investments across multiple asset classes.
Does Jersey offer listing services for funds?
For those considering listing their fund, The International Stock Exchange (TISE) in Jersey offers a cost-effective and flexible alternative to other major stock exchanges like the London Stock Exchange. TISE is recognized for its efficiency and can be particularly advantageous for Real Estate Investment Trusts (REITs) and other investment vehicles. Approximately 40% of all UK REITs are listed on TISE, highlighting its significance and appeal.
Jersey fund administration
Collaboration with local law firms and Jersey fund service providers is crucial for facilitating the smooth setup, management and operation of funds. These firms often act as listing sponsors and advisors, and their expertise ensures compliance with local regulations and enhances the fund’s credibility and marketability.
Once established, the fund must adhere to ongoing regulatory requirements set by the JFSC. This includes regular reporting and adherence to anti-money laundering (AML) standards.
Engaging with a local Jersey fund administrator such as Ocorian can help manage these obligations efficiently. Having operated in Jersey for over 40 years, Ocorian has not only built a significant local presence in the Channel Islands but also a deep understanding of the market dynamics and regulatory environment.
For asset managers with a wider pool of funds and assets across international jurisdictions, it can be helpful to use a fund service provider with the power of global reach combined with local Jersey staff and knowledge. This strategic positioning is important when seeking to optimise their operations across global jurisdictions, such as in Cayman, BVI, UK, Ireland, and Luxembourg.
Ocorian, a global fund administrator uses a technology platform that creates seamless integration across these diverse regulatory environments, enhancing operational efficiency and compliance for its clients.
Conclusion
Setting up a fund in Jersey represents a strategic decision for fund managers and investors seeking to capitalise on the benefits of a leading offshore financial centre. With its investor-friendly environment, comprehensive regulatory framework, and international recognition, Jersey continues to be a top choice for fund establishment. By leveraging local expertise and the flexible options available, investors can effectively navigate the complexities of fund setup and management, positioning themselves for success in the global market.
About Ocorian Fund Services Jersey
Having been a part of the Jersey financial landscape for over 40 years, Ocorian’s Jersey fund services team of 150 + professionals is well-equipped to handle the complexities of fund administration in the Channel Islands. Each team member brings specific expertise in different areas of fund accounting, compliance and administration, ensuring that our clients receive highly specialized and knowledgeable support.
We have sector specialist teams that focus on particular sectors including private equity, real estate, Islamic finance, and private debt, among others. This structure allows Ocorian to offer tailored services that meet the unique needs of each client, supported by experts who are well-versed in the specific challenges and opportunities of each sector.
Contact our Jersey fund administration team for further information.