Jersey emerges as a stable financial center despite COVID uncertainty

For decades the nine-mile wide Isle of Jersey has had to compete with larger locales such as the Cayman Islands and Bermuda as a hub for fund administration, but in the midst of a pandemic some key distinctions have now cemented its role as an international financial center (IFC). Perhaps what is most surprising is that business has changed little on the tiny isle since the pandemic began. “The reasons why Jersey was an attractive location pre-COVID are still very relevant,” said Joe Moynihan, CEO of Jersey Finance, a group that champions Jersey’s finance business, of which many are service providers in the alternative investment space. He says he is often asked how the industry fared and so far, it has fared pretty well. Of course, he admits that 12 months ago it would have seemed unthinkable that 90% of financial services teams would work remotely. Yet the transition was seamless. Another surprising fact about this Channel Island that is closer to France than the U.K., is that after installing fiber optic connectivity a few years ago Jersey now boasts the third fastest broadband speed in the world, according to Moynihan. Making sure the infrastructure remains robust is something that the financial services industry has been able to work closely with the government to achieve showcasing the nimbleness of the tiny jurisdiction.Jersey’s role as a domicile dates back roughly 60 years when it became a destination for European companies after WWII. But even before that, Ford Motor Company had European assets on Jersey going back to the 1920s, according to Philip Pirecki, who opened an office in New York last autumn as the U.S. business development lead at Jersey Finance. (L-R) Joe Moynihan, Philip Pirecki “IFCs like Jersey offer opportunity of an efficient plumbing system of moving capital all over the world,” he said. Moynihan added, "Two decades ago policymakers took the view that if Jersey was to stay in the finance industry it was to be top of the chart in terms of quality." The global brand that is Jersey finance has introduced a new Jersey private fund product and have raised 320 of those funds in a short span of time. Funds under administration on the island total £360 billion (US$463 billion).In July, Jersey Finance welcomed amended legislation that will make it significantly easier for managers to migrate limited partnership fund structures to the jurisdiction. The changes to the Limited Partnership (Jersey) Law 1994 introduce a new statutory basis for limited partnerships, which are often used by alternative investment funds, to be migrated from other jurisdictions, providing greater legal certainty for managers and investors. Officials say that while an LP could be migrated to Jersey previously, this legal change brings the island in line with the laws of other jurisdictions, making it easier for lawyers to give a clean legal opinion to the validity of migrating from elsewhere. “In an increasingly complex global alternative funds environment, managers are increasingly looking at their fund structuring options and indeed, over recent months, our funds industry has reported a rise in interest in Jersey from private equity and other alternative managers wanting to restructure their funds,” said Moynihan. He added that the fund managers are attracted by the sort of stability, expertise and high-quality service levels offered in the jurisdiction. Jersey’s strong track record in corporate governance and its ability to offer ‘whitelisted’ status are real benefits too. Pirecki said that there are many pillars of service on the island outside of fund administration. Jersey remains one of the top private wealth jurisdictions in addition to being a top fund jurisdiction and has banking and capital markets. In many ways, he added, it is a mini-London in that respect. Still, the times are different thanks to the pandemic. Moynihan said that several smaller funds chose not to launch earlier this year due to COVID-19, but other larger launches did. Overall, he sees opportunity for growth in private equity, real estate and credit side. In the U.S., Pirecki said there was a legitimate pause as people were shifting how to work with investors and handle due diligence in the spring. He added though that this is the first wave of new managers inquiries since the financial crisis. He sees it indicating many new funds with a bias to private equity launches. The upward interest in Jersey signals that this tiny island 3,400 miles away from New York has evolved its offering to not only withstand a pandemic, but to also go beyond the decades’ old impression as simply U.S. managers’ gateway to Europe.

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