With interest in private fund structures continuing to prove popular amongst alternative fund managers, Director Ian Horswell recently outlined why the Jersey Private Fund (JPF) should be on the radar of South African managers when he took to the stage at a recent Jersey Finance fund structuring seminar in Cape Town…
There’s no doubt that interest in private fund structures is continuing to soar – for small groups of sophisticated investors, they provide a perfect solution where fully regulated products just wouldn’t be suitable.
The addition of the JPF to Jersey’s armoury in 2017 is a case in point – more than 100 JPFs were registered within a year of its launch, and with the structure set to mark its second anniversary in March this year, the uptake continues to be considerable and rapid.
Introduced originally following a consultation to streamline and simplify Jersey’s overall funds regime, the JPF has essentially merged and replaced three other products: Very Private Funds, Private Placement Funds and COBO Only Funds.
With the ability to be open or closed ended funds, the JPF benefits from a streamlined, fast-track regulatory process and is geared up specifically for small groups of up to 50 professional or sophisticated investors.
JPF’s also offer a considerable amount of flexibility. They can be established as a Jersey company, a unit trust, or as a variety of partnerships including limited, limited liability, separate limited or incorporated limited.
Importantly, JPFs can only be offered to a specific category of investors, whereby a minimum investment of £250,000 is required, exceptions are made to sophisticated investors who have at least £1m of investable assets.
It’s also possible to register for your JPF online, which reflects Jersey’s focus as jurisdiction on digital to enable and support global managers.
With regards to the South African market in particular, private fund options like JPF offer a great opportunity.
For domestic managers seeking to establish offshore funds, whereby the fund is specific to South African Investors, a JPF can offer some genuine benefits. In comparison to a UCITS fund structure, which are extremely expensive, managers opting for JPFs will find it to be a much more cost-effective option.
In addition, since the launch, we’re seeing considerable interest in JPFs as managers continue to look at private structuring options to support specific objectives in the alternative space – as far as closed ended options are concerned, we’ve seen JPFs employed across the private equity, real estate, infrastructure and debt asset classes. There has also been a strong interest from sophisticated investors who are looking at club deals and co-investment opportunities.
For African managers looking to access international markets across these asset classes, the JPF can offer an appropriate, quick and highly tailored platform. Especially with Jersey being able to offer seamless access to the EU investor base through tried and tested private placement arrangements, the JPF has the potential to offer a fairly straightforward route to the EU market.
In its short lifespan, the JPF has really come to the fore as the go-to product in Jersey for alternative fund structuring, it’s something we’ve certainly seen at JTC for new funds and conversions, right across the private equity, real estate, infrastructure and debt fund asset classes.
Furthermore, the prospect of 48-hour authorisation for funds with up to 50 investors in particular is playing out well amongst fund managers, and we’re also seeing the structure being frequently used for EU-focused funds.
Overall, the JPF provides an attractive package for managers, including those in South Africa, looking for a structuring solution in a jurisdiction that offers strong transparency and legal frameworks whilst ensuring that the regulatory obligations are proportionate to the business that they are undertaking.
As managers continue to look for robust, sensible solutions to help them get their funds to market quickly and cost-effectively, we fully expect private fund solutions like the JPF to continue to maintain their appeal.
If you would like to find out more about JTC’s JPF capabilities, please contact Ian directly.