Fund Finance Laws And Regulations 2023 - Jersey

• Published date: 07 February 2023
• Subject Matter: Finance and Banking, Financial Services, Fund Finance
• Law Firm: Appleby
• Author: Mr James Gaudin, Paul Worsnop and Daniel Healy

Fund finance is growing in Jersey. As an international financial centre (IFC) of choice for global investments primarily into the UK and Europe, Jersey is home to regulated funds with aggregate net assets under management of approximately '458 billion (June 2022).

CONTINUED RISE IN FUND ASSETS IN JERSEY

The continued rise in assets under management reflects Jersey's increasing popularity as a funds jurisdiction and, in particular, as a home for funds investing in alternative asset classes, including hedge, real estate and private equity funds, which make up approximately 89% of funds business in Jersey. In addition, the lightly regulated Jersey Private Fund introduced in 2017 also continues to increase in popularity, with just over 550 launched to date with an increase of 22% over the last 12 months.

Further, significant funds continue to be raised from a wide range of EU countries, with Jersey seeing an annual increase in Jersey fund managers marketing into Europe with more than 200 Jersey-registered alternative managers marketing 374 funds - a 47% increase over the last five years (December 2021).

There are many reasons for the continuing confidence in Jersey as an IFC. With an increasing global need to demonstrate local economic substance, Jersey, with its 13,000-strong financial sector workforce and well-developed local infrastructure, has the edge over competitor jurisdictions who cannot comply with global substance requirements as readily as Jersey. Unsurprisingly, there has been a corresponding increase in the demand of the size, complexity and frequency of fund finance transactions in Jersey despite the impact of the current economic outlook and the COVID-19 pandemic.

JERSEY FUND FORMATION

As a leading financial centre, the fund and financial services regimes are well established and there have been no substantial changes that impact on fund formation, lending or security in recent years. The most commonly used fund structures in Jersey follow well established patterns and remain as companies, limited partnerships or unit trusts.

From September 2022, the Jersey limited liability company (LLC) vehicle has been able to be incorporated. The Jersey LLC is expected to prove popular with US investors and managers and build on the strong transatlantic ties Jersey already enjoys. The Jersey LLC has been designed to be as attractive as possible and will be very familiar to those who already use Delaware or Cayman LLCs in their structures, allowing great...