Funds Focus Series: The Future of Private Equity and Venture Capital

Jersey has become a fund domicile of choice for alternative asset managers due to its strong regulatory and service provider ecosystem, according to our panel of industry figures at our private equity and venture capital focussed event in London.

Nicola Le Brocq, our Director – funds, UK, highlighted the rising regulatory and investor pressure on managers to build trust and transparency, especially around ESG.

“Jersey is seen as a proportionately regulated, innovative and competitive jurisdiction,” she said, noting early adoption of global standards has put Jersey ahead of its rivals. “Geopolitical events have uncovered instability in some jurisdictions. This has spooked many investors and managers, which understandably expect stability and certainty from their fund domicile.”

Jersey’s approach has been praised by the OECD, the IMF and the World Bank. “This is all underpinned by world class infrastructure… and by a broad and deep expertise of the 14,000 people who work in Jersey’s finance industry,” she said. “We have come to a point where Jersey is now seen as a domicile of choice for alternative asset managers and a destination for managers.”

She noted that Jersey continues to outpace its closest rivals. The sustainable investment disclosure requirements introduced by the Jersey FSC last year, aimed at addressing greenwashing, means that Jersey is also becoming established as a leading sustainable finance centre.

Matt McManus, managing associate, Jersey, at advisory firm Ogier, noted that the UK Government’s focus on venture capital (VC) means Jersey benefits from “a rising tide lifting all ships”.

Jersey structures historically, across all sectors, worked closely alongside UK structures and UK investments as a route for capital to make its way into the UK, he said.

Jersey’s VC structures are “a very proven route to market for investment,” said McManus. “A lot of VC fund managers are using Jersey, especially because it’s so quick and flexible… especially for first- time fund managers.

“Fund managers can concentrate on what they do best – sourcing and making investments – and the Jersey service providers can deal with the establishment of funds and contribute expertise. I see that continuing to work.”

A major trend in private equity has been the increasing popularity of secondaries funds, which can help overcome potential mismatches between investor and manager timelines.

“It’s really important for the success of the whole business to give people access to liquidity,” said George Mills, a senior investment manager at British Patient Capital.

“The UK has become more successful at this in recent years… we’ve started to see a flywheel of successful entrepreneurs investing back into companies at a late stage, which you see in spades in Silicon Valley. It’s a really, really big important part of the ecosystem there.”

Matthew Glover, tax director, at advisory firm BDO noted that secondaries can also help investors and managers cope with unforeseen geopolitical events. “Secondaries transactions are needed to create liquidity, potentially, and [when GPs] want to hold on to an asset or put further investment into it,” he said.

Gurpreet Manku, deputy director general and director of policy at the BVCA, added: “The world’s changed. As the industry grows and more private capital enters this space, we need to offer up solutions and options for people to invest in different ways.”

This Funds Focus event was kindly sponsored by IQ-EQ.

IQ-EQ is a leading investor services group that brings together a rare combination of global technical expertise and deep understanding of client needs.
With over 4,000 people across 24 jurisdictions and more than US$500 billion in assets under administration, they have the know-how and the ‘know you’ to provide a comprehensive range of administration, compliance, asset and advisory services to multinational companies, fund managers, private clients and family offices operating worldwide.