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09 June 2021
Statistics released by the Jersey Financial Services Commission (JFSC), as at 31 December 2020, support the trend seen over the past year – that of the continued popularity of the Jersey private fund (JPF) product alongside the growth of the private equity and venture capital asset classes.
In fact, alternative asset classes now represent 89% of total funds business in Jersey, with private equity and venture capital funds under administration growing 21% year on year to £164.6 billion. Further, during the past year, despite the turmoil caused by the COVID-19 pandemic, almost 100 new JPFs were registered, bringing the total number of JPFs in Jersey to over 400, the vast majority of which are Jersey-domiciled structures.
Private equity has always been a key asset class for Jersey funds. The growth in JPFs as a product has largely been driven by, on the one hand, the rise in managers raising first-time funds and, on the other hand, the increase in the number of funds with fewer investors but larger ticket sizes. JPFs are used to raise capital from a worldwide investor base, as well as investors located in the United Kingdom and the European Union, and invest in every conceivable industry. Investors range from institutions, sovereign wealth funds and pension funds to family offices and high-net-worth individuals.
It is easy to understand the demand for JPFs, given the regime's simplicity and flexibility. The key selling points of the regime include:
With growth in venture capital funds fuelled by the pandemic, as living and working patterns were adapted, JPFs have served an important function in funding progress in technology innovation, particularly in the healthcare and education technology sectors.
Early-stage businesses and start-ups that can demonstrate fast growth rates or potential are attractive prospects for venture capital investors. For the reasons articulated above, there is likely to be a continued appetite for venture capital funds using JPFs.
For those engaged in the domicile debate and wondering 'why Jersey?', below are some of the key considerations to bear in mind. As a funds jurisdiction, Jersey offers fund managers and investors the whole package:
Jersey is the perfect 10 when considering the right jurisdiction for a new fund. The post-pandemic recovery is expected to drive further growth in the funds sector during 2021 and lead to a further increase in the use of JPFs in the context of private equity and venture capital funds.
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