HW Jersey Report07
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November 2007 Jersey Hedge Fund Services 2007 Unregulated funds Soaring fund Finance industry aim to maintain business attracts boom puts housing future advantage the professionals into overdrive CONTENTS In this issue… 03 Unregulated Funds give Jersey a vision for the future By Simon Gray 05 The inflow of fund industry expertise By David Pirouet, PriceWaterhouseCoopers 08 Jersey is responsive to the market’s changing needs By Gary Clark, Mourant 11 Jersey’s fund regime comes to maturity By Mark Chambers, Ozannes Advocates 13 Exciting additions to funds capability By Beverley Le Cuirot, Jersey Finance 15 Administrators under paper pressure By Heather MacCallum, KPMG 16 Jersey’s rising tide lifts service providers’ business By Simon Gray 17 Meeting the needs of Jersey’s new breed By James de la Cloche, Edge Properties Publisher Special Reports Editor: Simon Gray, [email protected] Sales Manager: Simon Broch, [email protected] Publisher/Editor-in-Chief: Sunil Gopalan, [email protected] Marketing Director: Oliver Bradley, [email protected] Graphic Design (Special Reports): Siobhan Brownlow at RSB Design Photographs: Courtesy of Jersey Tourism Published by: Hedgemedia Limited, 18 Hanover Square, London W1S 1HX Tel: +44 (0) 20 3159 4000 Website: www.hedgeweek.com © Copyright 2007 Hedgemedia Limited. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the publisher. JERSEY Hedgeweek Special Report Nov 2007 www.hedgeweek.com | 2 OVERVIEW Unregulated Funds give Jersey a vision for the future By Simon Gray Building on the success of the Expert Funds Luxembourg and Ireland, compete to offer regime launched three years ago, which ever more lightly regulated regimes for almost overnight reinvented Jersey as a alternative funds. Jersey is seeking to set domicile and servicing centre for alternative itself apart from the crowd with a fund funds, the island is planning to complement vehicle that not only does not require initial its existing range of fund vehicles by offering approval or ongoing supervision but carries unregulated funds for sophisticated and no obligation to use service providers on the institutional investors that entail no further island such as administrators, nor any audit oversight once their establishment has been requirement. notified to the industry regulator, the Jersey According to Geoff Cook, chief executive Financial Services Commission. of the island’s financial industry promotional The move to launch completely body Jersey Finance, the regime was drawn unregulated funds at the beginning of next up on the basis of feedback from fund year comes as other jurisdictions across sponsors that “simplicity, certainty and Europe, including Guernsey, the Isle of Man, speed” were paramount in establishing ➧ p6 JERSEY Hedgeweek Special Report Nov 2007 www.hedgeweek.com | 3 Packed with potential.* At PricewaterhouseCoopers our people, our clients and our To find out more about what a industry contacts – both locally and around the world – make relationship with us could do for for a formidable business network. But that’s not the only your business, call: reason why our clients choose us. David Pirouet It’s how well we realise this potential that really sets us apart. +44 1534 838302 The way that we listen and question, challenge, collaborate Karl Hairon and support. Developing deep and long-lasting relationships +44 1534 838522 that build trust and enhance value. In the Channel Islands, PricewaterhouseCoopers supports or visit www.pwc.com/jg businesses like yours by turning challenges into opportunities, in key areas including audit, best practice, advice, compliance, financial risk management, structuring and tax. *connectedthinking ©2007 PricewaterhouseCoopers CI LLP. All rights reserved. ‘PricewaterhouseCoopers’ refers to the Channel Island firm of PricewaterhouseCoopers CI LLP or, as the context requires, the PricewaterhouseCoopers global network or other member firms of the network, each of which is a separate and independent legal entity. PricewaterhouseCoopers CI LLP, a limited liability partnership registered in England with registered number OC309347, provides assurance, advisory, tax and administration services and is regulated by both the Jersey and Guernsey Financial Services Commissions as a provider of trust company business services. The registered office is 1 Embankment Place, London WC2N 6RH and its principal place of business is Twenty Two Colomberie, St. Helier, Jersey JE1 4XA. PRICEWATERHOUSECOOPERS The inflow of fund industry expertise By David Pirouet Jersey’s fund industry is in blooming good process. This influx is increasing the choice health, as the statistics make clear. The of service providers for fund managers and growth in fund assets under administration to their advisers to choose from. GBP210bn by the middle of this year Equally heartening is the steady growth in represents a rise of almost 50 per cent over the number of hedge fund managers the previous 12 months, with just under half establishing all or part of their operations in the total represented by private equity, Jersey. Many are relatively small businesses, property and hedge funds. but one larger manager to dip a toe into the The island’s premier vehicle for alternative water a couple of years ago was Brevan investments, Expert Funds, also increased by Howard, which established a small around 50 per cent to reach a total of 319 in administration and compliance base. Today David Pirouet is a partner with the year to June, and there’s been no sign of the firm is gradually increasing its operations PricewaterhouseCoopers in the pace slackening since then, with enquiries Jersey and some of its investment managers have coming in from new promoters and new become resident in the island. funds continuing to launch notwithstanding The authorities seek a balance between the recent market turbulence. encouraging economic growth and taking The flow of new business appears to be care not to overstrain the resources of a split between promoters that have used small island through high immigration. In this Jersey in the past and new fund managers environment, the focus is on attracting that are targeting sophisticated and businesses that add considerable value institutional investors. But just as without requiring large employee numbers. encouraging for the island is an increase in One of the additional attractions of Jersey number of skilled professionals who are for fund managers is its established expertise boosting the jurisdiction’s reputation for not only in fund services but in professional industry expertise. corporate administration. This is becoming The past year has seen steady growth in more important as fund promoters increasingly the range of local services providers to the need to demonstrate that proper management alternative fund industry, such as control is being exercised in the jurisdiction in Complyport, the leading London-based which the fund is managed – especially when regulatory and compliance consultancy investment advice to the fund is being headed by Ron Weekes, which established provided by a fund manager in London. an office in St Helier at the end of last year. Pressure has been steadily put on hedge Also, a well-established fund promotion fund and private equity managers by HM agency, Brook Street has moved to the Revenue & Customs over the past few years, island recently. and the recent debate about changes to the The development of the industry is UK’s investment management exemption prompting growth in the fund administration rules has added to the need for managers to sector. In recent months LaSalle Global Fund ensure their offshore structures can stand up Services has launched operations, to robust scrutiny from the tax authorities. Rathbones, which already had a substantial Not only does Jersey have the local presence in Jersey, has opened a fund professionals to provide expertise in management and administration office, and administration of fund management vehicles, two or three more administrators are but it ties in with the trend for managers to currently going through the authorisation establish substantial activities in the island. ■ JERSEY Hedgeweek Special Report Nov 2007 www.hedgeweek.com | 5 OVERVIEW Fund Encyclopaedia reported – admittedly using figures affected by the fluctuations in the dollar exchange rate – that the island’s fund servicing industry had grown to USD225.9bn (GBP112.5bn) in 1,367 funds and sub-funds at the end of June, an increase of nearly 150 per cent from USD91bn (GBP59.7 billion) in mid-2002. Among funds domiciled on the island, Lipper found, the largest alternative asset class was real estate funds with total net assets of USD69.4bn, representing 41 per cent of total domiciled fund assets, followed by private equity and venture capital funds with USD33bn. Whatever the exact numbers, industry practitioners are confident that the island p3 ➧ alternative funds aimed at the most enjoys a solid base on which to add a new sophisticated investors. string to its bow. The ultimate goal is for “This is a significant step forwards for the Jersey to challenge the Cayman Islands, funds industry in Jersey and a natural home to at least half of the world’s hedge progression in our goal to become the funds, for some of its domicile business, European jurisdiction