National Private Placement Regimes (NPPRs) are proving an increasingly popular means of marketing into Europe and, as such, we've published four case studies to demonstrate how they're being successfully used.
Jersey offers easy and cost-effective marketing into the EU through NPPRs, providing non-EU fund managers with an attractive alternative to the Alternative Investment Fund Managers Directive (AIFMD) passport. The AIFMD 'passport' allows EU investment funds to be distributed across the EU. However, the EU investment fund market is still predominantly a national market - in fact, only 3% of EU AIFs are registered for sale in more than three Member States.
NPPR works thanks to bilateral agreements between Jersey's financial regulator and those in each EU Member State - and Jersey has these in place with the majority of EU countries, as this interactive tool illustrates. These agreements will not be impacted by Brexit and the regime will continue to operate for all third countries pending any extension of the AIFMD passport.
Crucially, marketing through NPPR offers a lighter regulatory burden and therefore often a lower cost to non-EU managers. In a nutshell, using Jersey offers alternative fund managers:
- future certainty
- a tried-and-tested regime
- simplified regulatory obligations
- a cost-effective platform
A success story
The NPPR route through Jersey is working extremely well. Recent figures show that the number of alternative fund managers (AIFMs) choosing to future-proof their EU-focused funds through Jersey grew by 8% in the first six months of 2018, and by 23% year-on-year as at June 2018, to stand at 161 managers.
Meanwhile, the total number of Jersey alternative investment funds (AIFs) being marketed into the EU through NPPR also increased to stand at 306, representing a 5% increase over the first half of the year and an 11% rise since June 2017.
Private placement in practice
Jersey offers a compelling proposition and below are some real-life examples of funds launched in the past two years where a Jersey-based AIFM has successfully raised EU capital through private placement, some through reverse solicitation and some through active marketing.
Case study one
This UK venture capital fund set up a Jersey fund and raised €240m from EU investors – around half the fund's total size - across five EU markets – the UK, Netherlands, Norway, Luxembourg and Ireland.
- Adviser Location: UK
- Fund Size: £100m – £500m
- Total Capital Raised from EU Investors: €240m
- EU countries from which capital raised: Ireland, Luxembourg, Netherlands, Norway, UK
- Asset Class: Venture Capital
Case study two
With its adviser based in the Nordic region, this mid-market European buy-out fund set up a Jersey fund and raised a significant proportion of its total capital from EU investors based in ten different EU markets.
- Adviser location: Nordic
- Fund size: €1bn - €2bn
- Total capital raised from EU Investors: €800m
- EU countries from which capital raised: Belgium, Cyprus, Finland, France, Germany, Luxembourg, Netherlands, Spain, Sweden, UK
- Asset class: mid-market buy-out
Case study three
This large €5bn private equity fund had considerable cross-border interests, with its advisers based in various countries in Europe and the Americas, and investing in assets in Europe and North America. By setting up a Jersey fund it was able to raise €3bn from EU investors spread over 14 different EU markets.
- Adviser location: Europe and Americas
- Fund size: €5bn+
- Total capital raised from EU investors: €3bn
- EU countries from which capital raised: Belgium, Cyprus, Denmark, Finland, Germany, Ireland, Italy, Luxembourg, Malta, Netherlands, Spain, Sweden, Switzerland, UK
- Asset class: private equity, focussed on Europe and North America
Case study four
This fintech-focussed private equity fund had its adviser based in the UK and Switzerland and raised around half of its total capital (between €400m and €500m) from investors across nine EU locations.
- Adviser location: Switzerland and UK
- Fund size: €400-500m
- Total capital raised from EU investors: €215.5m
- EU countries from which capital raised: Belgium, Denmark, France, Germany, Italy, Luxembourg, Netherlands, Spain, UK
- Asset class: private equity, focussed on fintech
As these case studies show, Jersey's NPPR route is working incredibly well in practice and is a genuine solution for managers based in a diverse range of non-EU countries running a broad range of fund types, sizes and asset classes. The message is clear – Jersey is playing a supportive role in enabling non-EU managers to continue to market their funds to EU investors through its tried-and-tested private placement platform.
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