Jersey is rightly proud of its reputation as a leading domicile
for companies wishing to raise money on the London Stock Exchange
("LSE") and elsewhere. As at the beginning of 2012 the
Crown Dependency companies (Isle of Man, Guernsey and Jersey) made
up 69% of all offshore companies listed on the Main Market or AIM
and 76% by way of market cap. Whilst Guernsey was ahead in terms of
pure numbers of listings, Jersey dominates by way of value with a
total market cap of £90,858 million. This compares well to
the Island's next biggest rivals, Bermuda with £28,348
million and Guernsey on £19,220 million. Further afield
Jersey's onshore rivals as yet have made no substantial
penetration. Luxembourg companies come in at £3,318 million,
Singapore at £504 million and Hong Kong at £3
Glencore, the world's largest diversified commodities
trader, chose Jersey to domicile its listing vehicle. The US$ 11
billion IPO in 2011 represented London's largest ever public
offering and qualified the shares for immediate inclusion in the
FTSE 100. Glencore listed on both the LSE and the Hong Kong Stock
Exchange ("HKSE"). Glencore was not the only Jersey
listed company to make a splash in the financial press's
headlines last year. Vallar Plc, Nat Rothschild's investment
vehicle, raised US$ 1.07 billion in an initial public offering in
London to fund a mining acquisition.
Jersey's reputation is also growing in the Far East. Capital
raising in this region was traditionally was the reserve of
companies incorporated in Bermuda, BVI and the Cayman Islands. The
approval of Jersey holding companies for use on the Hong Kong Stock
Exchange in 2009 was significant. United Company Rusal raised US$
2.2 billion in 2010. Rusal also had a dual listing on the HKSE.
Jersey's use as a means of raising European money for Far
Eastern companies has a longer pedigree with a quarter of the
Chinese companies that have listed in London doing so through
Jersey. The double taxation treaty ("DTA") signed with
Hong Kong in February of this year will help to cement the growing
reputation. This is the first DTA that Hong Kong has signed with a
leading international offshore centre.
So why do investors like Jersey vehicles. In summary it comes
down to three things: reputation, tax and a good legal frame work.
Jersey has the leading reputation for offshore financial services
centres. Overall, Jersey is placed 21st in the City of London's
Global Financial Centres Index, well ahead of all its offshore
rivals. It presents a tax neutral environment. Companies wishing to
capital raise through public markets do not want to suffer adverse
tax consequences or become subject to additional UK, or other
countries, taxes. Neither do they want investors to be penalised by
stamp duty generated from trading securities. Jersey companies'
law follows the UK path but is more flexible. This is particularly
the case in relation to distributions out of capital, share buy
backs and financial assistance for the purchase of shares. Jersey
shares may be settled through the CREST system.
It is also worth mentioning that Jersey, unlike some of its
rivals, has a truly global brand and this is in part based on the
high levels of professional service provided and its superb
infrastructure. Jersey has close to 13,000 professionals working in
the finance industry and no other offshore centre can boast
So what of the immediate future for Jersey and its role in the
equity capital markets? Following intense activity in the first
third of last year, capital raising slowed down dramatically.
No-one has a crystal ball to predict the immediate future. The
signs are mixed. China, Brazil and the emerging markets more
generally are seeing a reduction in growth. Oil prices are high.
But there are signs of life in the US economy and fears about a
Eurozone meltdown are not as high as they were. So perhaps we will
see more issuers and their advisers knocking on Jersey's
financial doors later this year. But whatever the near future
brings, Jersey's long term important role in the global capital
markets will remain.
As originally appeared in Business Brief - Issue 280, April
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