The Jersey Private Fund will eventually take over from other similar investment products where the rules are simpler because their use is restricted to experienced or wealthy investors.
The JPF can only be marketed to a maximum of 50 investors who are ‘professional’ or have a minimum of £250,000 each to invest. The fund does not need Jersey-resident directors or require an offering document to be approved, and it can be set up in a streamlined process taking less than 48 hours.
The main requirement is that it needs a designated service provider registered with the Jersey Financial Services Commission who has to carry out the due diligence on the fund’s promoters.
In just over a year since the regime was introduced, more than 120 JPFs have been approved to invest in a wide range of alternative assets. Two of the earliest funds were for the Westbrooke Group which has a presence in South Africa and the United Kingdom.
Jonathan Heaney, the partner who led the Walkers team acting for Westbrooke, said that the speed with which the funds were established was an important factor in Westbrooke’s decision to take the JPF route.
‘Speed of establishment together with appropriate and proportionate regulation for the level of sophistication of the investor base, was instrumental in choosing Jersey and in particular the Jersey Private Fund regime as the domicile of the fund vehicles,’ he said.
‘The appointment of Walkers is another example of the growing international interest in Jersey domiciled fund vehicles and highlights the rising global demand for the Jersey Private Fund product in general – which greatly reduces time to market and facilitates the deployment of capital.’
Mr Heaney explained that there is still a lot of work involved in putting together the fund before final approval but promoters like to move fast when everything is agreed. Mr Heaney, who was assisted with the Westbrooke funds by Jersey-based counsel Christopher Reed, said that other jurisdictions also offer a fast-track service, so Jersey is competing with them. However speed in some other jurisdictions, might mean less effective regulation.
‘There are always places people can go to in order to get something done easier but that is not necessarily better. Speed could mean lighter regulation but Jersey has got the balance about right,’ Mr Heaney said.