By Jane Pearce
Are you focusing on your traditional markets or seeking to expand internationally? Are you an investment fund manager with a global footprint who is seeing the best opportunities for growth in the current economic climate? Do you partner with professional service providers who have an existing global network and who can help develop solutions to complex business problems and guarantee service quality? Does this allow you to focus resource on core activities such as fundraising, investing, managing and selling businesses?
The big growth opportunity for many investment fund manager firms is to find an entry into the emerging economies and provide their existing and new institutional investors with the sophisticated service that they are increasingly demanding in these new markets. International expansion is an attractive strategy as it allows firms to grow their business rapidly while continuing to do what they do best. It often makes sense to expand globally, rather than to diversify into local markets and risk a loss of focus.
Strategic decisions are important of course but implementing them can be time consuming and difficult. Entering new markets (or becoming more efficient in existing ones) can be tough and many challenges in terms of HR, IT, accounting, regulations and risk management still have to be wrestled with. IT costs are likely to spiral as firms develop technology to meet the reporting requirements and needs of their investors, regulators and shareholders in their traditional and new markets. IT spend, as a percentage of annual management fee, is therefore likely to increase and as a consequence there may be little appetite to invest capital to allow for 'best of breed' technology solutions to be purchased to deal with ever increasing demands. Finding an outsource partner will allow you to contain costs and help with complex issues. Selecting the jurisdiction in which to domicile your fund is also a key decision from an investor and regulatory perspective.
Jersey has world-wide appeal as a jurisdiction for investment funds and managers. It is recognised by the International Monetary Fund as being in the 'top division' of global financial centres (both onshore and offshore) (September 2009) and is one of the leading European jurisdictions for the investment fund industry. Jersey has a finance industry and professional infrastructure that has a headcount in excess of 12,000 and has developed a breadth and depth in its expertise and range of services that many competitor jurisdictions are not able to match. The net asset value of investment funds administration in Jersey in September 2011 exceeded £197.6bn.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.