Tue, 01/01/2008 - 15:40
Private equity funds business in Jersey is set for a further boost when new unregulated fund categories are implemented early in 2008.
The attraction of Jersey to the private equity community has been growing since the introduction of the Expert Fund Guide in 2004, which streamlined the regulatory approval process. This served as a springboard for an increasing number of fund promoters to domicile their alternative investment fund vehicles in the island and has helped consolidate its reputation as a premier centre for funds business.
A number of leading private equity houses, including 3i, CVC, Cinven and Nordic Capital, now have operations in Jersey. Feedback from recent visits to London has indicated that the island is recognised for its credible and experienced fund administrators and for the quality of its regulation and strength of its legislation.
The introduction of unregulated fund categories can only add to the jurisdiction's flexibility. Promoters using the new regime will not need to seek regulatory approval when applying to set up a fund in either the Unregulated Eligible Investor Category or Unregulated Exchange Traded Category.
Consultations continue with the Jersey Financial Services Commission to fine-tune the proposals, but there will be no requirement for a Jersey-domiciled administrator, directors or custodian and, significantly, no audit requirement. Jersey will be the first European jurisdiction to offer this level of flexibility to the private equity community.
Unregulated Funds will be suitable for professional and expert investors and those who have taken appropriate professional advice. Prominent investment warnings will indicate that such funds are unregulated, and existing funds will not be able to transfer to the new regime.
Professionals in Jersey believe the new categories will appeal to promoters particularly where speed in bringing the product to market is essential. For the private equity market, the Eligible Investor Unregulated Fund will offer an easier set-up process and avoid the delay of regulatory approval as notification requirements are minimal.
The latest additions to the island's fund capabilities come as the net asset value of Jersey funds under administration rose by more than 30 per cent to GBP221bn during the 12 months to the end of September. More than half of all assets - GBP113bn - are in alternative funds, and the 349 Expert Funds approved since 2004 account for GBP43.6bn.
The unregulated fund categories are the latest in a string of enhancements introduced to maintain the island's competitiveness in the alternative funds sector, after consultation with the industry and with support from the financial regulator.
The Non-Jersey Domiciled Fund Guide allows local functionaries to act for non-Jersey domiciled funds under a streamlined authorisation process. This offers promoters the choice of domiciling their funds elsewhere but still taking advantage of the island's administration or custody capabilities.
Earlier this year the Listed Fund Guide introduced a fast-track authorisation process for closed-ended collective investment funds that are to be listed on recognised stock exchanges or markets. The guide is set to build on a marked increase in the number of listed alternative asset funds established in Jersey.
Jersey's fund industry believes these changes will make the regulatory system more transparent and more efficient. The combination of a flexible regime, a strong and growing administration and custodian sector, the ability physically to locate the manager in Jersey and the ease of travelling to and from the island has made it the jurisdiction of choice for many alternative asset managers.
Beverley Le Cuirot is director of marketing at Jersey Finance
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