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Jersey Fund Services IN FOCUS 2020

GROWTH OUTLOOK Flexibility is key to support industry trends

REGULATION Launching the Jersey LLC to attract US managers

ALTERNATIVES Private equity and venture capital most prominent asset classes

Featuring Carey Olsen | Collas Crill | Jersey Finance | Maples Group | VG






By Joe Moynihan, Jersey Finance


By A. Paris


By Chris Griffin & Robert Milner, Carey Olsen



By Sam Sturrock, Collas Crill & Paul Monahan, Langham Hall


Ashley Le Feuvre, VG


Interview with Simon Hopwood, Maples Group


By Elliot Refson, Jersey Finance


Published by: Global Fund Media, 8 St James’s Square, London SW1Y 4JU, UK

16 | | | | | ©Copyright 2020 Global Fund Media Ltd. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the publisher. Investment Warning: The information provided in this publication should not form the sole basis of any investment decision. No investment decision should be made in relation to any of the information provided other than on the advice of a professional financial advisor. Past performance is no guarantee of future results. The value and income derived from investments can go down as well as up.




Foreword By Joe Moynihan, CEO, Jersey Finance


afts of global regulatory initiatives are continuing to challenge traditional fund structuring models and make the fund domiciliation picture far more complex, with investor buy-in becoming absolutely vital. As a result, key issues including Brexit, BEPS, substance and transparency have shot up the agenda when it comes to domiciliation decisions while increased uncertainty, costs, and regulatory and reporting requirements are all becoming major factors for managers and investors. In particular, an investor’s familiarity with a fund domicile and compliance with international standards remains vital. If a jurisdiction is respected by investors, then this gives managers confidence. These are all themes that are likely to influence decision making for years to come and that look set to shape the future of fund servicing. It’s clear that, with the fund domiciliation landscape becoming more competitive and complicated, specialist fund domiciles need to be alive to the significance of these key themes so they can be equipped to continue to support the global alternative fund management community. Critically, investors want a stable jurisdiction with no regulatory, legal or economic surprises – traits that have been underlined by Covid-19. But they also want a jurisdiction that is agile, resilient, innovative and forward-thinking. Balancing these qualities is vital for firms and jurisdictions specialising in alternative fund servicing. Being able to provide this balance, backed up by deep and broad expertise, requires a high-quality infrastructure, a tried-and-tested legal and regulatory environment, and a clear commitment to specialist expertise and high-quality service. From a Jersey perspective, being home to a mature and sophisticated fund servicing community is a key part of why the jurisdiction has seen such strong year-on-year growth in alternative fund activity, and why, as Jersey looks forward to the 60th anniversary of its finance industry in 2021, we are so positive about our future. As managers and investors look to partners they can trust in this newly emerging era of fund domiciliation, jurisdictions will have to be clearer than ever about their unique selling point, assert the stable fund servicing platform they provide, and evidence their quality of service if they are to continue to attract business – issues that this report will undoubtedly highlight.



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Growing transatlantic prospects By A. Paris


ersey is capitalising on its future position outside of the EU to attract US fund managers to its shores. This is despite the potential uncertainty driven by the looming end of the Brexit transition period and the global pandemic. “As the largest law firm in Jersey with the busiest investment funds practice, we have experienced a sharp increase in US managers seeking access to European Union or European Economic Area capital through the use of Jersey vehicles. “This trend is also evidenced by assets under management for funds incorporated in Jersey with US managers or promoters having increased 198 per cent from 2014-2019, as reported by the Monterey Jersey Fund Report 2019,” writes Jordan Zubeidi, Associate, Carey Olsen, in a briefing note. Simon Hopwood, group partner, Maples, agrees: “Having advised our US manager clients who focus on Europe, we continue to see a growing interest in this area. Jersey has worked hard to raise its profile in the US. This is supported by the industry and Jersey Finance who, having opened their New York office last year, are proactively promoting the jurisdiction.” The Monterey Jersey Fund Report 2019 shows the US as the third biggest source of assets by promoter origin. Managers looking to expand their distribution network can benefit from various advantages Jersey has to offer – as long as they are not seeking a full European fund passport. For example, from a European Union (EU) perspective, Jersey–based fund managers are classified as being located in a ‘third country’ and therefore the full scope of The Alternative Investment Fund Managers Directive (AIFMD) does not apply to them. “This means they may not be required to comply with some of the more onerous elements of the regulation, such as reporting and disclosure of remuneration. Importantly, the benefits of a Jersey manager can apply wherever the funds themselves are domiciled, be it in Jersey or elsewhere. “Put simply, access to Europe through the National Private Placement Regimes (NPPR) using a Jersey manager is a well-established model offering clear advantages,” outlines Elliot Refson, Director of Funds at Jersey Finance, in a factsheet specifically drawn up to evidence the benefits of Jersey to US fund managers. 6

Hopwood outlines: “As most funds only target a select number of EU/EEA markets, through the NPPR, Jersey provides sufficient access on a lighter-touch regulatory basis. As ESMA approved, Jersey is also ready if the third country EU passporting is ‘switched on’ in the future… With the end of the Brexit transition period fast approaching on 31 December 2020, if no agreement is reached before that date, the UK will become a third country and lose its EU passporting right. UK funds and managers will only be able to market in the EU through the NPPR. As the EU still wants non-EU funds and manager to have access to the EU, it is unlikely to close the NPPR.” Jonathan Heaney, Christopher Reed, Leanne Wallser, Matt Sanders and Kate Storey at Walkers also witnessed the increased demand emanating from American firms. They say: “In recent months an interesting but growing trend is beginning to emerge which further demonstrates the attractiveness of Jersey to wider markets.” The law firm has observed the growing use by US based managers/promoters of the Jersey private funds (JPF) structures as a feeder structure established specifically and solely for such managers’ and promoters’ established European investor base. “Where no formal fund-raise or promotion is required, JPFs offer an extremely effective and efficient solution. In the current politically driven regulatory climate, managers/ promoters in the major US fund centres are increasingly looking for alternative ways to structure investment vehicles suitable for and acceptable to their European domiciled investor base,” the lawyers note. Legal support The island already offers a variety of vehicles, including companies, cell companies limited partnerships, limited liability partnerships, unit trusts. However, in further testament of its efforts to attract US fund managers, Jersey is due to introduce a new Limited Liability Companies (LLC) Law. These vehicles are broadly used in the US, for holding companies and fund structures, which will be their most likely use in Jersey. Industry players expect that by the end of 2020, the first LLCs can be registered in Jersey. “Jersey’s new LLC law strengthens the island’s offering to US managers. With a significant amount of US assets JERSEY FUND SERVICES IN FOCUS | Dec 2020

OV E RV I E W already administered in Jersey, and with the Island’s appeal to US investors boosted by the uncertainty created by Brexit, the new law is well timed,” notes Ogier partner Matthew Shaxson. Law firm Cadwalader Wichersham & Taft outlines that the introduction of the limited liability company (LLC) under Jersey law is designed with the US market in mind and is seen as a means to enable Jersey to continue to grow the amount of in-bound business from North America. “A Jersey LLC should be treated in the same way as any other non-US LLC, and we expect the Jersey LLC to become an increasingly prevalent part of the fund (and therefore fund finance) landscape,” the firm comments. The familiarity of the LLC model across the US market will be vital in support of Jersey’s appeal in this regard. Amendments to the LLC law are currently being made to ensure this alignment. Mike Williams, Matt Gilley and Micheal Evans, at Collas Crill, highlight: “This groundwork will help ensure that the LLC legislative framework is consistent and robust. It will guarantee that the management, operation and administration of the Jersey LLC will be familiar both to US investors and others who use similar vehicles in the structuring of investments and transactions, while bringing continued benefits offered by Jersey as an international finance centre.” Jersey Finance cemented its commitment to attracting business from across the Atlantic by opening a New York office in October 2019. Just over a year on from that, the organisation says: “No one of course would be wise to predict the future direction of global markets in these uniquely unpredictable times, but some things will surely never change. As the markets recover from the initial disruptions of 2020, there will always be institutional investors with capital to invest. Jersey, with its stability and robust regulation, yet being nimble and innovative, and close to European and UK markets, can play a part in that recovery as a gateway to channel investment to where it is needed.” Hopwood notes: “The ability for non-domiciled funds to be managed in Jersey, combined with the introduction of the procedure for the migration of limited partnerships into Jersey this year and the US-style LLCs next year, Jersey should appeal to US managers.” A stable platform This focus on US fund managers is just one cog in the broader Jersey machine. The jurisdiction has prided itself on its stability as a primary pillar of its value proposition. Team Asset Management describes the firm’s motivation for choosing Jersey: “As one of the world’s oldest major international financial centres, Jersey offers reliability, political and economic stability together with a sophisticated and comprehensive legal system. It’s flexible, independently endorsed regulatory JERSEY FUND SERVICES IN FOCUS | Dec 2020

framework, overseen and supervised by the authorities and regulator, the Jersey Financial Services Commission (JFSC) encourages high quality business to the Island. This together with a sophisticated and comprehensive infrastructure of laws and regulations, promotes investor and business confidence and value.” And although the pandemic has affected the industry, like all its peers across the globe, Jersey has proven resilient. At the most recent annual general meeting of the Jersey Funds Association, chairman Tim Morgan commented: “The pandemic is already proving to affect asset classes and sectors in very different ways, but for Jersey the essential positive message remains that we offer a platform of stability in a rapidly changing market which is borne out through very high levels of activity through the recent period covering the pandemic.” Joe Moynihan, chief executive officer of Jersey Finance underscores how the pandemic has accelerated the need for global solutions and Jersey, as an industry, hopes to facilitate their delivery. He says: “Jersey has been working with and supporting global investors for nearly six decades. And it has been able to do that because, as a forward-thinking IFC, Jersey’s finance industry in collaboration with its government and financial services regulator, took the strategic decision more than a decade ago to implement a vision that would establish Jersey as a global player.” He adds that Jersey Finance research has shown 50 per cent of new business comes into Jersey from markets outside of Europe, which underlines the importance and significance of Jersey’s global network. n 7


Why are fund managers thinking about relocating to Jersey? By Chris Griffin & Robert Milner


ecently, the unprecedented combination of Brexit and Covid-19 has generated a sharp rise in the number of fund managers contemplating a move to Jersey. In this article, Chris Griffin, a funds partner in the Jersey office of leading offshore firm Carey Olsen, explores the reasons behind the increase in interest. Advantages of Jersey Jersey is an increasingly popular choice of jurisdiction for fund managers who wish to either relocate key principals, or establish a physical presence to benefit from neutrality and certainty from both a political and tax perspective. The Island also offers highly developed infrastructure, a familiar legal system and an established and internationally recognised regulatory framework. The main benefits of a fund manager establishing a presence in Jersey are: Taxation • A fund management company relocating to Jersey would be subject to a rate of Jersey income tax of zero percent. Jersey limited partnerships can also be used as management vehicles, and these are recognised as tax transparent in most relevant jurisdictions. 8

• Neither Jersey companies carrying on fund management, nor individuals resident in Jersey receiving capital distributions from such companies (or carried interest in limited partnerships) are subject to any form of capital gains tax. • The maximum rate of income tax for individuals in Jersey is 20 per cent of their worldwide income. There are no personal capital gains, inheritance, gift or other “wealth” taxes in Jersey. • Under the Island’s “High Value Residency” scheme, an individual relocating to Jersey is able to reduce their tax liability to 20 per cent on the first GBP725,000 of worldwide income and 1 per cent on other worldwide income, provided they can demonstrate they will be able to contribute GBP145,000 per year in personal income tax and that their annual worldwide income is comfortably in excess of GBP725,000 per year. Regulation Jersey is committed to the highest standards of financial regulation. In summary: • If the manager is managing only “private funds” (i.e. less than 50 investors/formal offers) and each fund obtains JERSEY FUND SERVICES IN FOCUS | Dec 2020

CAREY OLSEN approval as a “Jersey Private Fund” (48 hour turnaround), then the manager will not be required to be regulated in Jersey unless the fund is marketed to the EU. • If the manager is managing “public funds” (i.e. over 50 investors/formal offers) then it will require a “fund services business” licence from the Island’s regulator, the Jersey Financial Services Commission (the “JFSC”). Approval typically takes six weeks from the date of submission. • A fund management company seeking to avoid significant initial expenditure on back office support can take advantage of the JFSC’s “managed entity” regime, whereby a locally regulated administrator provides regulatory and compliance support. An added advantage of this regime is that, provided the relevant funds meet certain criteria, the management company is subject to a reduced regulatory capital requirement. • If a regulated Jersey fund manager operates any managed accounts alongside its main fund strategies, it will be able to take advantage of Jersey’s “Qualifying Segregated Managed Accounts” regulations which remove the need to comply with any additional regulatory requirements. EU Market Access Jersey is outside the EU, so a fund manager based on the Island is not subject to all the onerous provisions of the Alternative Investment Fund Managers Directive (AIFMD) (such as the remuneration disclosure rules), but can still be marketed to EU-based investors under individual Member States’ national private placement regimes. Jersey is on the list of the first non-EU jurisdictions to receive the AIFMD “passport”. When this becomes

available, Jersey managers will be able to “opt in” for full AIFMD compliance. Connectivity and Infrastructure There are frequent flights between London every day, and with journey times of less than an hour, it is possible to live in Jersey and attend meetings in the City. Jersey has long been home to a substantial alternative fund management industry and has a large number of experienced service providers and professionals across accounting, administration, depositary services, governance, fund management operations and tax services. Lifestyle Jersey offers an outstanding quality of life, and a plethora of things to do. Sport plays a huge part in Island life, and the high quality facilities include: six golf courses, an array of water sports, a 96-mile cycling network and all types of walking terrain suitable for every age and ability. The Island is well-served for schools, having both selective and non-selective fee-paying States and private schools. With modern facilities and low pupil-teacher ratios, Jersey students consistently outperform their mainland counterparts. Conclusion Factor in ringing endorsements from leading international bodies, including the OECD, IMF and the EU, in relation to Jersey’s well-regulated business infrastructure and its compliance with global standards on tax transparency and information exchange, then it is no wonder the Island makes complete sense as a home for global fund managers. n

Chris Griffin Partner, Carey Olsen

Robert Milner Partner, Carey Olsen

Chris Griffin has broad experience of both general international corporate and funds work with particular expertise in private equity and hedge funds, having spent 10 years in the City at two leading international firms and a large hedge fund. Chris advises on all aspects of fund and corporate transactions, including the legal and regulatory aspects of fund launches, and joint ventures. He also spearheads Carey Olsen’s crypto practice, having advised on a series of token offerings/ICOs, crypto funds and crypto exchanges.

Robert Milner is one of Jersey’s leading funds lawyers. He acts for a wide range of boutique and institutional fund managers and has extensive experience in establishing private, expert, unregulated and listed Jersey funds. He has particular expertise in establishing fund manager vehicles and structures, including migrating fund managers to Jersey from other jurisdictions.




Jersey – an ideal place for fund startups – begin your journey By Sam Sturrock & Paul Monahan


s frequent advisers on Jersey fund start ups, Collas Crill are often involved in preliminary structuring discussions with new fund managers and sponsors. These sponsors are typically focussed on ‘alternative’ assets such as real estate, private equity, venture capital, debt and infrastructure assets for a professional / sophisticated / institutional / HNW / sovereign wealth fund investor base (i.e. not necessarily retail investors). We understand the anxieties that often sit behind the questions we receive, namely: • Will investors be turned off if I choose a particular jurisdiction and are my choices for this project ‘market standard’ or novel? • Will the reality meet the hype that I’m given from advisors and service providers or industry bodies? • How do I manage this launch efficiently so I don’t incur massive costs before I’ve even got commitments from investors? • Am I speaking to the right people about the right issues and can I rely on them? • How can I maximise my chances of making this project a success? Experience and support It’s key to establish a great team and trusted network of service providers and advisers who have experience at guiding you through the complexities. Jersey has a skilled workforce of over 14,000 people who are expert at running your structure and understanding the underlying assets, Sam Sturrock including world 10

leading global advisors and service providers which keeps costs competitive and client service levels high. Quality service provision ultimately increases returns to investors. Kick the tyres Physical proximity to key financial markets such as the UK and EU means ease of visiting, relationship building and substance. A similar time-zone to your team and your investors helps to make the day to day operations and the execution of transactions as seamless as possible. Jersey’s excellent tech/infrastructure helps operate virtually with the 3rd fastest global broadband speed and it is well placed for digital closing of transactions, business continuity and remote working. Access to Investors Jersey provides an environment that has the appropriate balance between a robust regulatory framework and flexibility to enable you to access your investors. Outside of the EU/EEA, Jersey provides a relatively frictionless way for global investors to pool capital efficiently. For EU/EEA investors, Jersey utilises the national private placement regime (NPPR) meaning that fundraising can be surgical and efficient on a country by country basis without having to incur an ongoing large cost of an EU/EEA AIFM. Interestingly, with some 97 per cent of EU funds being distributed in three or fewer Paul Monahan countries, NPPRs JERSEY FUND SERVICES IN FOCUS | Dec 2020



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COLLAS CRILL can be a more efficient option than an onshore structure. Jersey’s entry into an MoU with the UK Financial Conduct Authority ensures that Jersey funds can continue to market into the UK under the NPPR and provides certainty to both sponsors and investors. Don’t leak It is usually critical to try and ensure that there is tax neutrality for the fund vehicle itself (as various taxes will usually already be being paid at the investor and underlying asset levels) whilst satisfying any applicable economic substance requirements. Jersey has opted to be an international ‘good neighbour’ and through its longstanding international relationships with organisations such as the OECD and EU Code of Conduct Group, has chosen to maintain the highest international transparency, tax reporting and disclosure standards. Accordingly, new funds will be adhering to investor expectations in relation to good governance, reporting and international standards. Jersey offers a variety of types of entity to meet structuring requirements including limited partnerships, unit trusts and companies, amongst others. Expect the unexpected Jersey and its regulator, the Jersey Financial Services Commission, are nimble and well run with good relationships internationally so no matter what happens, you can expect that Jersey will offer a regime that is ‘best in class’. With collective representation in the form of Jersey Finance, there is also comfort from the fact that the Jersey finance community and Government is in a position to work together on international and industry issues that arise from time to time. Not a fund? No problem… Collective pooling of capital for investment in multiple assets (i.e. risk spreading) or an open-ended vehicle, is likely to be classified as a fund. Having said that, the Jersey regulatory environment is flexible enough to allow an investment structure to adopt a different approach such as a single investor or single asset, joint venture or a special purpose/securitisation investment scheme.

First time funds The Jersey Private Fund (JPF) provides an excellent regulatory regime for first time funds. Broadly, where there are offers of 50 or less to prospective investors, funds can access a really flexible regime and tailor their own approach. It also offers speed to market so you can act quickly on opportunities. If however an ability is required for either the fund to be listed or for more than 50 offers to be made, Jersey has regimes that can also cater for that. This can be helpful as a sponsor evolves and their investor base grows through subsequent fund launches. Key Jersey stats: • Total NAV for regulated funds was GBP361.7 billion as at 30 June 2020. • As at 30 June 2020 there were 347 JPFs with approximate of GBP42.9 billion. Top practical tips Top practical tips for new funds from Paul Monahan, Executive Director at Langham Hall Jersey • Have your business plan ready. Have clear parameters and test it (and consider contingencies!) • Know your structuring needs. Get experienced guides to help. • Promoter due diligence – Be ready to provide due diligence to demonstrate your ability to fulfil your role as a fund sponsor. • Investors – Understand your investors, their investment objectives, risk appetites and taxation needs – these can impact structuring decisions. • Services and key service providers – Primary service providers are your lawyer, administrator and tax advisor. Explore/tailor what services you are going to need from your administrator – they are a key partner in your business for the life of your fund. n Langham Hall is regulated by the Jersey Financial Services Commission. This note is a summary of the subject and is provided for information only. It does not purport to give specific legal advice, and before acting, further advice should always be sought. Whilst every care has been taken in producing this note neither the author nor Collas Crill nor Langham Hall shall be liable for any errors, misprint or misinterpretation of any of the matters set out in it.

Sam Sturrock Group Partner, Collas Crill

Paul Monahan Executive Director, Langham Hall

Sam Sturrock is an experienced funds, corporate and regulatory lawyer who heads the Collas Crill Jersey funds team. Sam joined the firm in 2020 following over 10 years in top tier Jersey law firms, 2 years as a director at a multinational administration business and a year assisting Jersey Finance on legal and technical matters. He advises clients (including funds, managers, directors, investors and administrators) on the establishment and whole life cycle of funds/holding structures for a variety of asset classes.

Paul Monahan is an Executive Director at Langham Hall Fund Management (Jersey) Limited and has over 13 years’ experience in the Jersey funds industry, primarily in real estate and private equity. Prior to Langham Hall, Paul was a Manager in the Funds Authorisation team at the JFSC. He worked within the Securities Division where his duties included the authorisation and supervision of public and private collective investment schemes. Before the JFSC, Paul spent six years working in real estate fund administration.




Building on a solid foundation Ashley Le Feuvre considers the key trends currently driving growth and development within Jersey’s funds industry


s the financial services industry and the world at large continue to navigate the unprecedented impact of the Covid-19 pandemic, Jersey and Jersey-based service providers remain ready and able to support the funds industry and its changing needs. While undoubtedly a significant event, Covid-19 has only added to the series of challenges the funds industry has faced in recent years. These include ever-changing tax legislation, increased international regulation and reporting obligations (including the introduction of economic substance requirements), geopolitical turbulence (not least of all the Brexit saga), as well as the overall impact of the global security situation and continuing cybersecurity threats, including the high profile leaking of sensitive information. A thriving environment Jersey remains robust, undeterred by all of these pressures, and its alternative funds industry continues to thrive. To complement an already flexible range of regulatory options, the Jersey Private Fund (JPF) product was introduced in April 2017. This has proved hugely popular with VG’s clients across differing asset classes and over 300 JPFs have now been established across the industry. The JPF is light-touch regulatory option and can be structured as a company, limited partnership or unit trust. It is usually licensed within two days of an application being submitted, which makes this an efficient and cost-effective option. Alongside the JPF, the fully regulated Certified/Expert Fund structure remains well utilised and, with mechanisms for structuring single asset and co-investment structures JERSEY FUND SERVICES IN FOCUS | Dec 2020

outside of regulation, there is a range of options to meet all requirements. The Jersey regulatory framework has been recognised by the European Securities and Markets Authority. This means there are structuring opportunities using Jersey for fund promoters looking to raise funds in Europe, in particular utilising National Private Placement Regimes, which would generally provide a much more cost-effective solution when compared to a hosted Alternative Investment Fund Manager (AIFM) arrangement located in an EU member country. A solid foundation The global focus on regulation and good governance is welcome and highly positive, as Jersey is well placed to benefit from this. For fund structures, Jersey can assist promoters in marketing their offering by providing a domicile of real substance in which to locate their funds. Jersey offers tax neutrality, has over fifty years’ experience with fund establishment and administration and benefits from political, fiscal and economic stability. Given the continuing global turmoil, this should be a source of comfort to promoters and investors alike. Jersey has robust economic substance legislation to ensure that companies performing the various prescribed activities, including fund management, generate the appropriate level of economic activity and demonstrate effective governance and oversight in the Island. The European Union Finance Ministers have also confirmed Jersey’s status as “cooperative”, supporting and reaffirming the Island’s reputation as a well-regulated jurisdiction. 13

VG There is a robust, technical infrastructure available in Jersey, with access to a wide choice of high-quality functionaries and service providers and a growing pool of experienced and independent professional directors. VG provides a full range of administration and fiduciary services to all types of Jersey investment vehicles. This infrastructure, combined with the island’s highly developed legislative and regulatory framework, which has been subject to positive scrutiny by the OECD, the IMF and Moneyval among others, serves to demonstrate to investors that there exists in Jersey a framework of exceptional corporate governance to safeguard their interests. This puts the jurisdiction in a strong position when compared to others and the there is strong potential to plug skills gaps which may appear in other markets. A growing demand The asset classes driving much of Jersey’s recent success are private equity and real estate. Covid-19 has hampered the real estate market; travel restrictions have made it challenging for promoters looking to deploy funds to assess targets and there has been a necessary focus on managing tenants and relationships with lenders. Despite this, deals are happening – albeit they are generally taking longer to complete. Covid-19 has borne opportunities within the real estate market. We have seen a shift in the attractiveness of different commercial real estate sectors, most notably logistics being favourable with a continued move away from retail. What the future real estate market will look like continues to evolve, however Jersey remains a jurisdiction of choice for real estate structures, with flexible options like the Jersey Property Unit Trust contributing to this attractiveness. Private equity also prevails as a strength for Jersey, with some impressive fund raisings recently announced by Jersey domiciled funds. There is a growing demand among investors for impact and socially responsible investment and Jersey has recognised this. This was underpinned by the Jersey Financial Services Commission issuing a consultation paper on sustainable investments. The goal of this is to enhance the processes and procedures around investments marketed as environmental and socially responsible and address the risk of investment products being mislabelled as such, known as “greenwashing”. While the M&A market has slowed, there is growing interest in technology, with private equity and venture capital funds looking to invest in technology businesses, in particular cybersecurity and fintech, health and med-tech and also online retail and educational technology. The enduring Covid-19 situation may also present opportunities for distressed asset investments and for debt funds, with the lending market facing its own challenges. These trends all play to the strengths of Jersey and 14

also VG, where we have a focus on the closed-ended funds market. Clearly, Covid-19 has caused disruption to the funds industry resulting in various struggles, in particular for smaller promoters. These include securing firm investor commitments, capital deployment, liquidity management and not to underestimate certain simple, logistical issues, such as requirements for wet-ink document signing, which remains necessary in some instances. The Jersey industry has responded well to these difficulties, with clients able to leverage the expertise of their service providers and their relationships with international counterparts. A flexible approach to the evolving “new normal” Looking ahead, the growing importance of SRI will remain a key investment theme for clients. From a geo-political perspective, the potential fallout from a no-deal Brexit is likely to be significant for the UK, with the possibility of a weakened pound perhaps presenting buying opportunities for non-sterling investors, particularly in the real estate asset class. From a global perspective it is impossible to look at the next twelve months without continuing to consider the ongoing impact of Covid-19 and the associated restrictions on travel restrictions, remote working and similar and Jersey has shown it is capable of adapting to meet these challenges while continuing to provide a high-level service to clients. It was recently announced that Jersey has maintained its position as the top ranking offshore jurisdiction in the latest Global Financial Centres Index (GFCI) and remains the only offshore location included in the top 30 International Finance Centres. The primary objectives for Jersey over the coming year therefore, are to maintain this well-earned reputation and continue to demonstrate stability, experience, quality and adherence to global standards. This will be done while continuing to have an innovative and responsive industry in the face of global competition. Likewise, Jersey service providers will need to maintain a deep understanding of clients’ individual needs and take a flexible and innovative approach to addressing them. This is something, which VG, an independent and owner-managed business, is ready and able to do as our clients continue to adapt to the evolving “new normal”. n

Ashley Le Feuvre Director, VG Funds Ashley Le Feuvre, Director of VG Funds, joined VG in 2010 and has over 30 years’ experience within the industry. Ashley works within VG’s Funds and Islamic finance team and is responsible for relationship management of regulated and conventional corporate clients. Ashley also oversees the management and administration of Shariah-compliant structures including investment funds and special purpose vehicles, with a focus on real estate and private equity.


Independent fiduciary and administration solutions

Talk to us: Ashley Le Feuvre Director – VG Funds T +44 (0)1534 500417 E

Trevor Norman Director – Islamic Finance and Funds T +44 (0)1534 500418 E

Looking for tailored and efficient fund solutions? Our funds team has 25 years’ experience establishing and administering funds on behalf of investment managers and institutional, expert and sophisticated investors. We specialise in closed-ended alternative investment funds with a focus on real estate, private equity, venture capital, debt and infrastructure.

For details of the legal and regulatory status of VG, please visit


Jersey – the trends, opportunities & challenges Interview with Simon Hopwood


he Covid-19 pandemic has caused a devastating impact on human life and health, and the global economy. As a consequence, the funds industry has faced unprecedented challenges, as it continues to navigate through unchartered waters. Despite this, the Jersey funds industry has remained resilient with net assets under administration up 5.7 per cent1 year on year standing at GBP361.7 billion2 with alternative investment funds representing 87 per cent3. Noticeably, private equity was up 19 per cent year on year4 and managers using Jersey to market funds into the EU increased by 9 per cent year on year5. With over a 50-year proven track record, Jersey is internationally recognised as a first-class and well-regulated domicile for funds and managers. Although close in proximity to the UK and EU, Jersey is independent, which provides political, economic and fiscal stability, as well as offering tax neutrality with substance, and a flexible regulatory regime. As a jurisdiction, Jersey cooperates with global authorities and meets all international standards. It also has wide choice of flexible and innovative entities and fund products with fast-track procedures, supported by a world-class infrastructure with high-quality professionals, service providers and non-executive directors. This platform forms the basis of an essential ecosystem, providing a perfect environment for Jersey’s alternative investments funds to evolve, grow and thrive, while meeting the needs of managers and investors. What are the key trends currently driving growth and development within the Jersey funds industry? The Jersey funds industry has seen continued growth and development in new funds and investment structures. This year, many funds were opportunistic in nature, taking advantage of the volatile markets, the lower valuations and distressed assets. Across asset classes, private equity and venture capital funds were the most prominent, particularly those focused on technology, Fintech, health and 16

financial services, as these sectors continued to thrive in the current climate. With many businesses struggling with liquidity issues due to the prolonged pandemic, distressed asset funds and credit funds have also been on the rise. Many hedge funds have taken advantage of the market volatility, reporting strong performances. Other than infrastructure funds, the real estate sector has been slow this year, however, some funds have raised capital ready for when the market picks up again. Jersey has proven popular for acquisition and alternative investment vehicles, taking into account their unregulated status and no audit, custody or valuation requirements. Many co-investment, joint venture, managed account or single asset investment structures formed were opportunistic in nature, as managers wanted to take advantage of good investment opportunities. Other vehicles had defensive objectives, such as side pocket arrangements to hold underperforming or hard to sell or value assets. Due to the proximity to the UK and Europe and offering stability, governance and substance, Jersey continues attract new managers. These are either hosted by a local service provider or a ‘full presence’ manager, with promoters ranging from the institutional or well-known and established players to the start-up managers. How has the jurisdiction fared over the course of the pandemic? As an Island, Jersey responded and adapted well to mitigate the impact of the pandemic. The States of Jersey introduced emergency laws addressing public health concerns, imposing non-essential travel restrictions, physical distancing and lockdown measures. When borders re-opened, a free testing system was implemented with contact tracing, permitting travel. The Jersey Financial Services Commission (JFSC) and the Jersey Comptroller of Revenue recognised the challenges faced by Jersey’s funds industry. They took a pragmatic and flexible approach, JERSEY FUND SERVICES IN FOCUS | Dec 2020

MAPLES GROUP introducing measures and relaxing certain procedures to help the industry maintain ‘business as usual’. The Jersey funds industry was robust and also adapted well to challenges faced. Service providers’ businesses and working practices completely changed overnight with businesses transitioning to remote working operations. This led to an increased use of technology, in particular video conferencing for meetings to maintain contact and conduct day-to-day business, and online portals and secure file sharing for managers’ and investors’ access to information. How are these trends impacting your organisation’s objectives? Although previous recessions and market crashes have been experienced before, the pandemic presented new challenges. We found our clients needed more timely support and guidance on a wide range of legal and regulatory issues. With our global network of 18 offices worldwide, we have the benefit of a deep bench of expertise and knowhow globally and this has ensured that we can continue to provide the most innovative and efficient solutions for our clients at all times. While new fund and manager workflows helped us achieve our financial objective, we have to ensure our teams are appropriately resourced with the most effective systems and back office support. This will enable us to meet our client-focused service objective. With more reliance on technology this year, our continued investment in our technology and infrastructure platforms has ensured we have efficient, secure and failsafe systems in place, particularly using secure file sharing sites and online portals for our clients. Can you outline the primary challenges your clients in Jersey are facing at the moment and how your services are helping them overcome these difficulties? Clients experienced unprecedented challenges this year. Fund managers have had to deal with crisis management, being forced to implement business continuity plans to protect their staff and businesses, transition to remote working operations, and adapt to conducting business virtually. With an increased reliance on technology and IT, data and cybersecurity risks also had to be monitored more closely. For funds managing to launch, new challenges were encountered with fund raising and investor take-on. Face-to-face investor meetings were replaced by virtual meetings, and online portals and secure file sharing sites were used for sharing and exchanging fund, due diligence and know your client documentation. In addition to the pandemic, UK and EU managers and funds have also had to assess the implications of the UK losing its EU passporting right and the impact on existing JERSEY FUND SERVICES IN FOCUS | Dec 2020

cross-border delegation arrangements, requiring the possible restructure of those arrangements. Leveraging the broad capabilities within the Maples Group’s global network, we have been able to guide our clients through these difficult times, providing timely advice to help them resolve or manage their issues or crises. Our global IT team and systems have enabled us to use secure file sharing sites for investor take-on, due diligence and transactions. What are the most significant developments you expect within the Jersey funds industry over the coming year? A significant development will be the launch of the Jersey LLC, which is based on US LLC, as a flexible vehicle for a fund, manager or SPV, which should increase Jersey’s appeal to US managers. We will closely monitor AIFMD II, which should have minimal impact on Jersey. OECD BPEPS and the Pillar One and Pillar Two blueprints will also be monitored to track if there will be a workable carve-out for fund vehicles. Another hot topic is environmental, social and governance (“ESG”), as managers are now more aware of their responsibilities to the environment and are looking to factor ESG into their operations and investment processes. Jersey has actively encouraged sustainable finance. The JFSC is committed to maintaining ESG international standards, where applicable and proportionate to Jersey. Depending on the outcome of the JFSC’s consultation paper concerning ESG, the regulatory codes of practice applying to Jersey funds and managers are likely to be revised to include certain ESG requirements, covering disclosure and ‘greenwashing’. n 1. Source: Based on statistics published Commission as at 30th June 2020. 2. Source: Based on statistics published Commission as at 30th June 2020. 3. Source: Based on statistics published by 4. Source: Based on statistics published Commission as at 30th June 2020. 5. Source: Based on statistics published by

by Jersey Financial Services by Jersey Financial Services Jersey Finance. by Jersey Financial Services Jersey Finance.

Simon Hopwood Partner, Maples Group Simon Hopwood is head of Maples and Calder’s Funds & Investment Management team in the Maples Group’s Jersey office. He has significant experience in the establishment, structuring and maintenance of offshore funds and other investment, acquisition and holding structures within the real estate, private equity and hedge fund sectors. He has a particular specialism in the establishment and structuring of UK REITs and sharia compliant funds and other investment, acquisition and financing structures. Simon acts for a wide range of clients, whether as fund promoters or investors, including well-known financial institutions, investment managers and sovereign wealth funds, boutique investment managers, established family offices and high net worth investors.



The right ingredients for long-term success By Elliot Refson


s global markets continue to grapple with extreme uncertainty, with the ongoing fallout of Covid‑19 and the impact of Brexit becoming a reality, Jersey’s funds industry finds itself in a strong position – well prepared to support investors and guide them through unchartered waters in the short-term and with the right ingredients to help them achieve their long-term ambitions too. Jersey finished 2019 in bullish mood, with total fund assets rising to a new record high last year of more than GBP345 billion, with private equity in particular performing strongly, rising by almost a fifth. That momentum was carried into 2020, despite the major global challenges prompted by the pandemic, with the value of funds serviced in Jersey rising further to stand, midway through the year (30 June 2020), at GBP361.7 billion – a 6 per cent year on year rise – with alternatives, including private equity, venture capital, real estate, infrastructure and hedge driving that growth. With approaching 90 per cent of total funds business in Jersey now in alternatives, Jersey has successfully positioned itself as a major specialist alternatives centre at the hub of Europe. Further, according to the latest Monterey report, private equity and venture capital now represents 56.5 per cent of all fund Assets Under Management in Jersey, a figure which has grown 144 per cent over the past five years. Importantly, this is not just a few large funds – the number of funds has grown by 71 per cent over that time and one in three Jersey funds is now either private equity or venture capital. We are also seeing an increasing number of very significant private equity managers physically relocating to Jersey. With the outlook for alternatives looking positive – Preqin figures indicate that 93 per cent of investors expect to maintain or increase their allocations to alternatives in the longer term (Investor Update H2 2020) – the future for Jersey’s funds industry looks bright. Of course, we are in an unprecedented environment. The pandemic has changed the landscape and the scenario we all find ourselves in today is starkly different to where we were at the beginning of the year. What has been positive, though, has been the resilience Jersey’s funds sector has shown. In many ways, the 18

current challenging environment has served to highlight the inherent strengths of Jersey’s funds proposition – the stability and certainty our regulatory and legislative regime offers, the high standards of governance we adhere to, our focus on service quality, and the hugely impressive level of expertise our 14,000 strong financial services workforce has in administering, structuring, managing, advising and servicing investment funds. One of our greatest strengths, which has really come to the fore in recent months, is the ability of our Government, regulator and industry to come together to address issues and innovate quickly and collaboratively. This almost unique approach has led to, amongst other things, our response to economic substance requirements – which was lauded by the OECD – our resilient response to Covid19, changes to Limited Partnership (LP) laws to make it easier to migrate LPs from other jurisdictions to Jersey and, shortly, new Limited Liability Company (LLC) laws. As we look ahead to 2021, more than ever alternative managers will be relying on centres that offer sensible regimes, a no-nonsense approach to getting funds to market, and some much-needed certainty to manage, structure, and service their funds in a hugely challenging environment – and Jersey is ready to meet those demands. Future Research supported by Jersey Finance into the future of fund domiciliation, undertaken just prior to the pandemic, underpins this outlook. It found that regulatory certainty and investor familiarity will be key factors when it comes to fund domiciliation. Above all else, investors – and it is investors who primarily determine domiciliation selection – want jurisdictions that can offer expertise and political and fiscal stability with a no change outlook from a regulatory, legal or economic perspective. This is a long-term factor that won’t change because of Covid-19. If anything, it will make those qualities even more important. In fact, since the release of that report and in response to the pandemic, we have seen managers placing a new emphasis on contingency planning, looking at their physical infrastructure, and the robustness and resilience of their fund domiciles, looking to Jersey for a solution. JERSEY FUND SERVICES IN FOCUS | Dec 2020

JERSEY FINANCE Jersey’s long-standing assumption towards substance, for example, is providing managers and investors with certainty – heightened by Jersey being an early adopter on introducing economic substance legislation last year. This is manifesting itself in greater workflows and in the number of asset managers continuing to commit to relocating to and establishing a presence in Jersey – over the last five years, the community of fund managers operating in Jersey has more than doubled to now include some of the most significant hedge, real estate and private equity fund managers. Jersey’s ability to offer seamless, efficient access to investor markets around the world is also a major part of its global appeal. It’s noteworthy that the top five sources of capital committed to Jersey funds, for instance, are the UK, the US, Ireland, Luxembourg and Canada. Within Europe, Jersey is extremely well placed thanks to its ‘opt-in/opt-out’ approach to the AIFMD to play a pivotal role in supporting non-EU (including post-Brexit UK) managers wanting to access EU investor capital. Jersey is already a third-country in relation to the EU and has all the infrastructure in place to enable funds to continue to market seamlessly into the EU through its tried-and-tested private placement route – a route that will not be impacted by Brexit and that in the majority of cases is a much more efficient, flexible and quicker option than the onshore AIFMD passport. Recent figures show, for example, that the number of alternative managers marketing into Europe through private placement in Jersey has risen 76 per cent since 2015 to more than 180. This growth is underpinned by the strong support for National Private Placement Regimes in KPMG’s recent pre-AIFMD2 report. The expectation is that, against the backdrop of Brexit, private placement is likely to become increasingly attractive to UK and other non-EU managers. Jersey bridges the gap between the EU and the UK in both a pre and post-Brexit environment and takes off the table the uncertainty of what will happen in the UK after the end of the transition period on 31 December 2020. Innovation remains a critical element of Jersey’s proposition as a fund centre too – particularly from a fund servicing perspective, providers are investing heavily in digital solutions and this will be pivotal in meeting the needs of managers in the coming years in areas like cyber security, reporting and data management. A recent lawtech report published by Jersey Finance also serves to highlight the greater efficiencies that can be delivered to the funds industry by Jersey’s already mature and sophisticated legal sector through automation, smarter data processing and slicker client relationships. Jersey also remains committed to product development – the launch of the Jersey Private Fund (JPF) in 2017 was a case in point. Introduced specifically to meet the needs of JERSEY FUND SERVICES IN FOCUS | Dec 2020

Elliot Refson Director of Funds, Jersey Finance

small numbers of professional investors needing a streamlined, quick-to-market option, today the JPF has become a go-to product for alternatives with more than 350 JPFs having been established. Jersey is also adding greater sophistication to its sustainable finance platform, with the Jersey Financial Services Commission having undertaken a consultation on sustainable investing this year and Jersey Finance committing to a long-term vision and strategy that can help position Jersey as a centre of excellence for sustainable finance. The landscape is clearly a complicated one but as a forward-looking jurisdiction, Jersey has been successful in developing a stable and certain ecosystem for alternative funds. We have done that by providing a stable jurisdiction with a minimal-change outlook, by offering future-proofing around Brexit and a marketing bridge to UK and other global investors, by acting as a complementary location to other European funds jurisdictions by providing parallel structures for a global investor base, and by delivering a collaborative triumvirate of industry, government and regulator that leads to an ability to adapt quickly and pragmatically. Now more than ever, our absolute focus is on providing clarity and simplicity in everything we do, to play a role in enabling high quality alternative investment through a turbulent time to support economic recovery, whilst giving managers and investors confidence for the long-term too. By doing this, we will continue to grow our global footprint and assert our position as the alternatives jurisdiction of choice. n 19


CAREY OLSEN Carey Olsen has one of the largest investment fund practices in the offshore world – advising clients on the laws of Bermuda, the British Virgin Islands, the Cayman Islands, Guernsey and Jersey. Our team comprises 22 partners and a total complement of 80 lawyers, many of whom trained and worked at leading international law firms before joining Carey Olsen. We advise on all types of private, public, retail and listed funds, including open and closed-ended funds, limited partnerships, unit trusts and companies. Recognised as the leading legal adviser to funds across the Channel Islands and with strong fund practices in the Caribbean and Asia, we represent more companies and funds listed on the London Stock Exchange than any other offshore law firm and regularly advise on listings on the NYSE and HKEx, Euronext, CSX and TISE.

Contact: Chris Griffin & Robert Milner | | +44 (0)1534 888900

COLLAS CRILL Collas Crill is an offshore law firm with offices in BVI, Cayman, Guernsey, Jersey, and London. Collas Crill delivers a comprehensive range of legal services to clients locally and around the globe. The firm develops strong relationships that generate confidence and trust with all clients. Our lawyers always seek to give clients the full range of options to make the right decisions, and will give a practical view on how to proceed to achieve the best outcome. Clients include some of the world’s leading financial institutions, international businesses, trusts and funds, as well as HNW individuals and families across the globe.

Contact: Chloe Withe | | +44 (0)1534 601700

MAPLES GROUP The Maples Group, through its leading international law firm, Maples and Calder, advises global financial, institutional, business and private clients on the laws of the British Virgin Islands, the Cayman Islands, Ireland, Jersey and Luxembourg. With offices in key jurisdictions around the world, the Maples Group has specific strengths in areas of corporate commercial, finance, investment funds, litigation and trusts. Maintaining relationships with leading legal counsel, the Group leverages this local expertise to deliver an integrated service offering for global business initiatives. For more information, please visit:

Contact: Simon Hopwood | | +44 (0)1534 671314

VG Established in 1982, VG is one of Jersey’s largest, independent and privately owned providers of fiduciary and administration solutions. Our independence allows us to act quickly and decisively to create and administer the right solutions for you. We specialise in the administration of funds, companies, trusts, foundations and structures to hold real estate investment. We are recognised for our award-winning expertise in Islamic finance.

Contact: Ashley Le Feuvre | | +44 (0)1534 712497