Surge In Jersey Private Placements Ahead of EU AIFMD
by Jason Gorringe, Lowtax.net, London
29 July, 2014
With the end of the transitional period for the Alternative Investment Funds Managers Directive (AIFMD), the number of funds applying to the Jersey Financial Services Commission (JFSC) to use Jersey's private placement route into Europe has surged to 164.
57 alternative investment fund managers have confirmed their authorization under Jersey's AIFMD private placement regime, and there are three depositories in Jersey offering AIF Depository services as well as others in the pipeline.
According to Jersey Finance – the promotional agency for the island's financial services industry – figures from the JFSC show that the UK remains a key market for Jersey fund managers. As at June 30, 2014, 32 managers licensed to carry on fund services business in Jersey completed a notification form in which they indicated which of the European Economic Area (EEA) member states they intend to market into (often including notification of more than one EEA member state). Of the 32 notifications, 28 managers said they intended to market into the UK, 15 into Sweden, 14 into Belgium, 13 into the Netherlands, 11 into Ireland, and 10 into Denmark, France, Germany, and Luxembourg.
Jersey's Private Placement regime, which was introduced in January 2012, is aimed at professional and sophisticated investors. Funds placed under the regime can be approved within three days. Private placement funds must either be established or managed in Jersey; be closed ended; be offered to no more than fifty investors; and must only admit sophisticated investors or professional investors. Private Placement Funds are desirable due to their flexibility and because there are no prescribed investment restrictions, concentration limits, or leverage constraints.
Under Jersey's AIFMD framework, managers can gain regulatory approval to market into Europe through a range of different options depending on the type of fund being established. As well as securing market access, private placement has the added benefit of minimal additional AIFMD disclosure and reporting requirements, subject to the applicable requirements of the relevant EU/EEA member state(s).
Jersey has also already put in place the option of a fully-compliant AIFMD regime to permit Jersey managers to avail themselves of the third country manager marketing passport throughout the EU as soon as it is introduced.
Geoff Cook, CEO of Jersey Finance, said: "These figures for Jersey provide strong evidence that Jersey's private placement route is being warmly received by the market as an attractive, flexible, robust and cost-effective option. It is hugely encouraging that managers are using Jersey and routing their European funds through the jurisdiction, and the expectation is that Jersey's approach will become even more attractive thanks to the certainty it brings and the speed of authorization the regulator can offer. In addition, we anticipate an uptick in fund servicing business from European managers who now have considerably more complex AIFMD reporting requirements."
Ben Robins, Chairman, Jersey Funds Association, said: "The fact that managers are primarily intending to target the UK market is not surprising, given Jersey's strong links with the UK. In fact, we have seen a spike in recent months in the number of high value private equity and real estate and infrastructure funds being routed through Jersey into the UK. What is also interesting is that Jersey funds are intending to be marketed widely across Europe, as well as in non-EU countries, and are not concentrated in a small number of markets, which demonstrates Jersey's broad appeal and the fact that its private placement option is offering a truly viable alternative."
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