Thu, 27/12/2007 - 17:25
Private equity has been one of the cornerstones of Jersey's dramatic emergence as a leading funds jurisdiction over the past four years, although it has been an integral part of its financial sector expertise for much longer. For the Mourant group, which is by far the largest fund administrator in Jersey through Mourant International Finance Administration, and also the foremost legal advisor to the sector with Mourant du Feu & Jeune, private equity has been a major driver of business growth in recent years.
Today the private equity side of the business is enormous, making Mourant probably the largest private equity administrator in Europe if not the world, thanks to a client base that includes many of the leading names in the industry, such as CVC and Axa. While all alternative investment sectors are flourishing in Jersey, private equity is probably the largest of all, ahead of property funds.
Alternative fund business has grown vigorously across all asset classes since the launch of the island's Expert Funds regime in 2004. Over the past five years, the asset volume of funds serviced in Jersey has risen from GBP100bn to a new record of GBP221bn at the end of September. Over the past year the number of Expert Funds established in Jersey has grown by nearly 45 per cent to 349, with assets growing by 71 per cent to GBP43.5bn.
The past 12 months has seen both organic growth from existing clients and the arrival of new promoters for whom Jersey is becoming the domicile of choice, thanks to the combination of flexibility and high standards in its regulatory structure, and the growing expertise across the island in areas such as legal advice, audit, and administration and accounting services.
The private equity sector has enjoyed a boost from the introduction of streamlined authorisation procedures for closed-ended funds and, especially in the light of the renewed interest in stock market-listed alternative investment vehicles, from recognition of its regulatory regime by the Financial Markets Authority in the Netherlands, exempting Jersey-domiciled funds from the need for licensing when they list on Euronext Amsterdam.
Jersey is also benefiting from uncertainty about the future direction of UK tax rules, particularly regarding the status of non-domiciled individuals, to attract alternative fund managers keen to benefit not only from fiscal advantages and lifestyle benefits but from a can-do business culture. Meanwhile the island has adapted its own tax structure in order to create a sustainable long-term base for high value-added businesses to flourish.
The next step will be the launch at the beginning of 2008 of unregulated funds, which will see funds destined for highly sophisticated institutional investors exempted from ongoing supervision. Because these funds do not carry any requirement to use Jersey-based service providers, they will ease some of the constraints of a growing volume of business on a sector with limitations on the talent pool it can access; but the island is unlikely to miss out on sophisticated work in areas where it has proved it can compete with the best.
The constraints can also be eased by technology, and Mourant and its competitors are all investing in systems that will lessen the need for growing staff numbers. With the group's alternative asset base rising by 50 per cent last year alone, with the majority of that growth coming in Jersey, it's a strategy that's already paying off.
Gary Clark is head of hedge fund services with Mourant International Finance Administration in Jersey
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