Explored: The rise of the Jersey Private Fund
Explored: The rise of the Jersey Private Fund
What led to the rise of JPFs and why are they becoming increasingly popular?
The JPF provides a low-cost and streamlined solution with light-touch regulation, which suits many promoters' strategies of establishing fast, cost-effective funds to pool capital and invest in a number of assets. Whether launching their first fund or indeed a successor fund, the simplified application process and fast track 48-hour approval timeframe is widely appealing.
The previous private fund regime in Jersey comprised multiple products. The launch of the JPF in 2017, offered a simplified and streamlined solution, replacing the previous regime.
The JPF is highly flexible and can take the form of a limited partnership, company, protected cell company, incorporated cell company, LLP, SLP, ILP or unit trust. Furthermore, the reliance on the designated service provider is advantageous to promoters, as it alleviates the regulatory burden from themselves.
What does the designated service provider role entail? What regulations surround JPFs?
The designated service provider (DSP) role includes ensuring that the JPF meets the required eligibility criteria; ensuring all necessary due diligence has been carried out regarding the JPF and its promoter and ensuring compliance with local AML/CFT requirements. There is also an obligation to notify the Jersey Financial Services Commission regarding any material events or changes, plus submission of an annual compliance return.
The key point to note is that in order to provide the DSP role, the service provider must be registered by the Jersey Financial Services Commission under the Financial Services (Jersey) Law 1998, to carry on one or more the classes of funds services business specified. The JPF also requires a consent to the Control of Borrowing (Jersey) Order 1958. The regulation is light-touch and there are no additional regulations imposed upon the JPF.
What makes JPFs attractive to venture capital and start-up businesses?
Primarily it's the flexibility, structuring and marketing options, streamlined authorisation process and low-cost attributes. Start-up firms and venture capital promoters are often looking for flexibility in terms of a jurisdiction which meets their investor's needs, so the fact that the JPF can be domiciled in any jurisdiction is attractive.
Compared to products offered by other popular domiciles of choice, the JPF will often prove favourable due to Jersey's strong track record in the funds industry, regulated stability, best practice standards, strength and depth of resources and "Anglo-Saxon" ethos.
Can JPFs be attractive to all types of firms?
Definitely. As well as venture capital and start-up firms, we’ve also seen the product prove favourable with family offices and large PE houses. Whilst firms will continue to utilise the collective investment fund regime for the launch of new and successor funds, for which there is no restriction on marketing to a certain number of investors, the industry has evolved and the JPF may also be fit for purpose for such firms launching funds targeting under 50 investors. In this case, owing to the light tough regulation of the JPF compared to the full regulation of a collective investment fund, the JPF works well as a lower cost solution.
Looking at the landscape more broadly, how have Jersey funds evolved over time and will there be much change going forward?
The landscape is certainly evolving, we are seeing greater diversity in terms of promoters, their structuring choices and asset base and we expect this to continue. We expect to continue to see more structuring nuances, more start-ups, club arrangements and joint ventures. In the current climate, we are agile and work with our clients to understand their needs.
Are you anticipating business to be disrupted by the Covid-19 pandemic?
At Ocorian, it is very much business as usual. We are focused on continuing to provide the highest quality service to our clients as well as on the health and safety of our employees. Our global network of offices has taken proactive steps to ensure we are ready and available to offer the services our clients might need in these challenging times.
What makes Ocorian stand out from other service providers?
We adopt a partnership mentality when working with our clients, collaborating with them to provide a tailored approach that suits their specific needs whilst providing the highest levels of client service. We are agile and proactive in the implementation of AI and software robotics. Implementing operational efficiencies is key, not just for the administration of JPFs but for all aspects of administration.
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