Surge in Jersey private placement registrations as AIFMD transitional period comes to an end

Wednesday 30 July 2014

A strong surge in applications in the lead up to the end of the AIFMD transitional phase has seen the number of funds notifying the Jersey Financial Services Commission (JFSC) of their intention to privately place into Europe under AIFMD rules break through the 150 mark.

Figures collated by the JFSC show that, as at 22 July, a total of 164 funds had opted to make use of Jersey’s private placement route into Europe.

In addition, 57 alternative investment fund managers have confirmed their authorisation under Jersey’s AIFMD private placement regime, and there are three depositaries in Jersey offering AIF Depositary services as well as others in the pipeline.

Figures from the JFSC also show that the UK remains a key market for Jersey managers. As at 30 June 2014, 32 managers licensed to carry on fund services business in Jersey completed a notification form in which they indicated which of the EEA Member States they intended to market into (which was often more than one EEA Member State). Of the 32 notifications, 28 managers said they intended to market into the UK, 15 into Sweden, 14 into Belgium, 13 into the Netherlands, 11 into Ireland, and 10 each into Denmark, France, Germany and Luxembourg.

Under Jersey’s AIFMD framework, managers can gain regulatory approval to market into Europe through a range of different options depending on the type of fund being established, with those funds benefiting from the market access, subject to the applicable requirements of the relevant EU/EEA Member State, that private placement under AIFMD brings but with minimal additional AIFMD disclosure and reporting requirements.

According to a recent survey of firms in Europe, the US and Asia by BNY Mellon and FTI Consulting, more than two-fifths of asset managers had not received authorisation of their alternative investment funds from their local regulator within the EU ahead of the AIFMD deadline, while nearly a fifth had not got a required AIFMD structure in place in time for the 22 July implementation date.

Jersey has also already put in place the option of a fully-compliant AIFMD regime to permit Jersey managers to avail themselves of the third country manager marketing passport throughout the EU as soon as it is introduced. 

Geoff Cook, CEO of Jersey Finance, said: “These figures for Jersey provide strong evidence that Jersey’s private placement route is being warmly received by the market as an attractive, flexible, robust and cost-effective option. It is hugely encouraging that managers are using Jersey and routing their European funds through the jurisdiction, and the expectation is that Jersey’s approach will become even more attractive thanks to the certainty it brings and the speed of authorisation the regulator can offer. In addition, we anticipate an uptick in fund servicing business from European managers who now have considerably more complex AIFMD reporting requirements.”

Ben Robins, chairman, Jersey Funds Association, said: “The fact that managers are primarily intending to target the UK market is not surprising, given Jersey’s strong links with the UK. In fact, we have seen a spike in recent months in the number of high value private equity and real estate and infrastructure funds being routed through Jersey into the UK. What is also interesting is that Jersey funds are intending to be marketed widely across Europe, as well as in non-EU countries, and are not concentrated in a small number of markets, which demonstrates Jersey’s broad appeal and the fact that its private placement option is offering a truly viable alternative.”