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08 March 2020
ISLAMIC FINANCE

Nurturing the perfect eco-system for alternative funds

By Mihaela Cornelia Moldoveanu, Director, Gulf Region at Jersey Finance

Mihaela Cornelia Moldoveanu, Director, Gulf Region at Jersey Finance


Over a period of more than 50 years, Jersey has developed a well-respected and forward-thinking funds sector.

In 2019, the total value of fund assets serviced in Jersey rose to reach a new record high of around $490 billion, with alternative funds, including private equity, real estate and infrastructure, showing stellar growth to now represent approaching 90 per cent of Jersey’s funds business.

In a world where regulatory initiatives are making cross-border investing more complex, where investors are looking at alternatives as they seek diversification as well as returns, and where family offices are increasingly disrupting the alternatives space, Jersey’s expertise is set to become increasingly attractive.

It's a trend we’re seeing play out equally across the GCC region. And with good reason.

Jersey’s ability to offer a global solution for servicing alternative funds has put it in a strong position to support the strategic needs of managers and investors—sitting within Europe, not part of the UK or EU but with strong ties to both. Jersey is a stable, neutral centre, with robust regulatory and legislative regimes, decades of experience, a commitment to high service quality, and one of the largest specialist workforces (around 14,000 professional) of any IFC.

Market access is a case in point. With regulatory complexity providing a real headache for managers, Jersey’s position means it can provide a straightforward solution for managers, no matter where they, their assets or their investors are based.

In particular, Jersey can act as a gateway to Europe—offering seamless access through tried and tested private placement regimes, with the number of managers choosing Jersey to structure their EU-focussed funds through private placement growing year on year.

Additionally, the company’s close constitutional ties with the UK mean that it is well placed to offer access to the UK too.

Beyond Europe, increasingly managers from markets including the US, the GCC and Africa are looking to future-proof their funds through a jurisdiction that can offer them long-term guarantees and optionality when it comes to structuring – and Jersey ticks the boxes.

Innovative

The core qualities that make up a stable, secure, professional platform undoubtedly continue to be the main draw for investors and managers to Jersey. However, as a forward-thinking jurisdiction, Jersey’s continues to embrace innovation.

In terms of structures, for instance, the launch of the Jersey Private Fund in 2017, aimed to give small numbers of sophisticated investors a vehicle offering quick regulatory approval, and it has been incredibly popular.

There are now more than 300 JPFs established, driven by demand for structures that are suitable for impact investing, as well as for family offices looking to co-invest.

Jersey has also been on the front foot by honing its proposition to support the global ESG drive. With a wide range of structures and specialist expertise, Jersey is well positioned to play a key role as the ESG agenda evolves.

Furthermore, the firm’s capabilities and expertise in Islamic finance also positions it perfectly to support Shari'ah-compliant structures.

Against a backdrop of growing interest in private equity and real estate opportunities across the GCC, Jersey’s ability to support the regulation of Islamic finance products and for Jersey SPVs to work with a range of Shari'ah-compliant Islamic capital market transactions, positions it perfectly.

Future

Recently Jersey Finance undertook some research looking at fund domiciliation trends. It found that the fund domiciliation picture is becoming much more complex and that it will be those IFCs that can be forward-looking with regards to specialist skills and expertise, developing innovative solutions to keep costs down whilst respecting global regulatory requirements, and reacting quickly to market trends that will succeed.

Jersey’s clear focus on these areas should give managers and investors in the GCC real confidence.


RELATED STORIES: Shari\\\'ah-compliant Islamic finance ESG

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