Mon, 12/11/2007 - 13:48
Jersey's fund industry is in blooming good health, as the statistics make clear. The growth in fund assets under administration to GBP210bn by the middle of this year represents a rise of almost 50 per cent over the previous 12 months, with just under half the total represented by private equity, property and hedge funds.
The island's premier vehicle for alternative investments, Expert Funds, also increased by around 50 per cent to reach a total of 319 in the year to June, and there's been no sign of the pace slackening since then, with enquiries coming in from new promoters and new funds continuing to launch notwithstanding the recent market turbulence.
The flow of new business appears to be split between promoters that have used Jersey in the past and new fund managers that are targeting sophisticated and institutional investors. But just as encouraging for the island is an increase in the number of skilled professionals who are boosting the jurisdiction's reputation for industry expertise.
The past year has seen steady growth in the range of local services providers to the alternative fund industry, such as Complyport, the leading London-based regulatory and compliance consultancy headed by Ron Weekes, which established an office in St Helier at the end of last year. Also, a well-established fund promotion agency, Brook Street, has also moved to the island recently.
The development of the industry is prompting growth in the fund administration sector. In recent months LaSalle Global Fund Services has launched operations, Rathbones, which already had a substantial presence in Jersey, has opened a fund management and administration office, and two or three more administrators are currently going through the authorisation process. This influx is increasing the choice of service providers for fund managers and their advisers to choose from.
Equally heartening is the steady growth in the number of hedge fund managers establishing all or part of their operations in Jersey. Many are relatively small businesses, but one larger manager to dip a toe into the water a couple of years ago was Brevan Howard, which established a small administration and compliance base. Today the firm is gradually increasing its operations and some of its investment managers have become resident in the island.
The authorities seek a balance between encouraging economic growth and taking care not to overstrain the resources of a small island through high immigration. In this environment, the focus is on attracting businesses that add considerable value without requiring large employee numbers.
One of the additional attractions of Jersey for fund managers is its established expertise not only in fund services but in professional corporate administration. This is becoming more important as fund promoters increasingly need to demonstrate that proper management control is being exercised in the jurisdiction in which the fund is managed - especially when investment advice to the fund is being provided by a fund manager in London.
Pressure has been steadily put on hedge fund and private equity managers by HM Revenue & Customs over the past few years, and the recent debate about changes to the UK's investment management exemption rules has added to the need for managers to ensure their offshore structures can stand up to robust scrutiny from the tax authorities. Not only does Jersey have the local professionals to provide expertise in administration of fund management vehicles, but it ties in with the trend for managers to establish substantial activities in the island.
David Pirouet is a partner with PricewaterhouseCoopers in Jersey
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