Chambers Global Practice Guide To Private Equity 2025: Jersey

1. Transaction Activity

1.1 Private Equity Transactions and M&A Deals in General

Following this cycle's all-time peak, reached in 2021, the global M&A market turned in its second-weakest year in exactly a decade in 2023. However, more normal deal activity levels returned in 2024, and there has been a good deal of M&A activity in 2025, especially in the infrastructure space.

As a well-regulated international Änance centre, Jersey continues to deliver innovative and high-quality downstream acquisition and investment fund-structuring solutions to global private equity and sectorfocused institutional sponsors.

In line with global market conditions, strong top-sponsor appetite remains for renewable energy/resources and infrastructure opportunities, which have greater potential for value creation over the life of an asset. Such transactions may involve more upfront cost and complexity. One key attraction for maintaining a stable of infrastructure assets is the "best in class" investor-return prospects that they have the potential to achieve. The acute focus on ESG seen across all sectors means that renewable energy and resources asset targets are in focus.

The mid-market landscape continues to be the most competitive, and possibly the most overcrowded, segment of the global private equity market in recent years. This is compounded by the need for many sponsors to deploy capital and access alternative credit solutions to complete leverage buyout transactions, which has added to the considerable pressure and focus on increasing investor returns. As a result, take-privates, pre-emptive bids and conventional auction processes persist.

This chapter provides an overview of the key trends and features of private equity transactions in Jersey and those involving Jersey-registered vehicles – ie, an acquisition (or disposal) where the buyer (or seller) is a special purpose vehicle owned and controlled by a private equity fund.

1.2 Market Activity and Impact of MacroEconomic Factors

Domestic market activity in Jersey is dominated by private equity involvement in Änancial services-sector businesses, such as professional corporate services and trust company businesses, which are the target of primary, secondary or tertiary private equity investment. Furthermore, 2025 has also seen reasonable levels of M&A trade sale locally. Certain transactions have triggered further consolidation in the trust and corporate services industry. Global banking businesses with a Jersey footprint also provide non-core business carve-out opportunities for private equity sponsors in the local Änancial services sector.

Separately, sustained use of Jersey vehicles by leading private equity sponsors investing in larger-scale primary cross-border deals across 2024 and 2025 saw a spread of activity across the following asset sub-classes:

• professional services, advisory and consultancy;
• infrastructure;
• wealth management-related Änancial services;
• enterprise software and business-to-business services; and
• renewable energy.

General equity market volatility, some of which has been tariɈ-driven in H1, 2025, has meant that private equity activity in the Jersey market, and in cross-border transactions where Jersey vehicles are used, has increasingly been focused on legal, tax and Änancial due diligence, closer examination of target growth strategies and a realignment of expectations on valuation.

Higher costs of borrowing in the UK and European market have led mid-market, and some top, sponsors to access leverage via alternate credit providers. This has positively impacted the credit markets by enabling borrowers to fund acquisitions on more Åexible terms, given that most alternate Änanciers are not constrained by the kind of regulatory capital and covenant criteria that constrain mainstream bank lenders.

2. Private Equity Developments

2.1 Impact of Legal Developments on Funds and Transactions Anti-Money Laundering (AML) Supervisory Regime

In mid-2023, the practical eɈect of the changes made to Jersey's AML supervisory regime (known as the Schedule 2 regime) was felt by local corporate service providers. Although signiÄcant to Jersey's own eɈorts and contribution to the global combatting of Änancial crime, M&A market participants transacting in Jersey or utilising Jersey acquisition vehicles for cross-border transactions will not have been impacted by the changes to the Schedule 2 regime. The main diɈerence in the new regime is the shift in primary responsibility for AML regulatory compliance away from Jersey corporate service providers to Jersey vehicles directly involved in certain types of Änancial services activities, leading to their appointment of Jersey Financial Services Commission (JFSC)-regulated AML service providers.

Jersey Funds Regimes for Private Equity Funds

The Jersey Private Fund (JPF) regime continues to be Jersey's most popular product for private equity funds (and in other sectors also).

The JPF regime is streamlined and Åexible, with a 48-hour online authorisation procedure, and is subject to a light regulatory touch but without compromising investor protection. JPFs are aimed at professional investors, high net worth investors and investors committing at least GBP250,000 (or equivalent).

As private equity funds are typically closed-ended, the attraction of JPFs in terms of speed of establishment, together with appropriate and proportionate regulation suited to the sophisticated investor base, continues to position Jersey favourably for fund establishment by both existing and new sponsors. The majority of new Jersey fund structures tend to be JPFs.

3. Regulatory Framework

3.1 Primary Regulators and Regulatory Issues Private Equity Fund Regulation

The principal legislation governing the regulation of most private equity funds in Jersey is the Control of Borrowing (Jersey) Order 1958, with the Jersey Private Funds Guide (a guidance note prepared by the JFSC) also being a key regulatory document. Any widely held structures are likely to be regulated pursuant to the Collective Investment Funds (Jersey) Law 1988.

Funds that are marketed in Europe are also likely to be subject to the Alternative Investment Funds (Jersey) Regulations 2012 (the "AIF Regulations") and the associated code of practice for alternative investment funds and AIF services business (the "AIF Code").

In addition, all funds are subject to the requirements of Jersey's AML supervisions regime, which applies AML rules to all Änancial services businesses in Jersey. Jersey-based service providers for funds are subject to regulation under the Financial Services (Jersey) Law 1998 (the "FS Law") unless an exemption applies. Providers of fund services must be registered and regulated by the JFSC, pursuant to the FS Law.

AML/KYC

Relevant sanctions and the usual AML/KYC rules apply to private equity transactions; there are no Jersey-speciÄc restrictions. The alignment of Jersey's AML regulatory regime with current Financial Action Task Force standards and recommendations has not had any impact on private equity transactions in Jersey or the use of Jersey-registered acquisition vehicles.

National security regulation in Jersey is very similar to that in the UK. Financial investors are screened by local authorities in accordance with international standards. There is no particular focus on sovereign wealth fund (SWF) investors, although many SWFs are, in the ordinary course, subject to robust checks either as principal deal counterparties (including as co-investors) or as fund investors/limited partners.

Takeover Code

The Takeover Code applies to certain transactions involving Jersey companies. Takeover Code compliance is implemented by the UK Takeover Panel, as the designated authority under primary Jersey legislation.

A Jersey company is subject to the Takeover Code if any of its securities are listed on a regulated market or multilateral trading facility in the UK, or on any stock exchange in the Channel Islands or the Isle of Man. This includes being listed on the main board of the LSE and the Alternative Investment Market. A Jersey company that has shares listed on other exchanges, such as the NYSE and Nasdaq, may also be subject to the Takeover Code if the Panel considers that the company's management and control are in the UK, the Channel Islands or the Isle of Man.

Domestic competition and antitrust regulation applies where merging businesses meet relevant thresholds. Where applicable, the approval of the Jersey Competition Regulatory Authority may be required.

EU Foreign Subsidies Regulation (FSR)

The EU FSR does not directly apply in Jersey and so is not relevant to local M&A transactions therein. However, Jersey Änancial services businesses that form part of wider UK and European or global groups may be tangentially impacted.

One general observation regarding the EU FSR is that, in addition to the usual M&A considerations (such as the completion timetable, closing conditions and risk allocation in deal documents), the EU FSR regime is likely to introduce additional and potentially signiÄcant disclosure requirements for private equity sponsors.

4. Due Diligence

4.1 General Information

The focus of due diligence in Jersey is on verifying corporate existence, maintaining solvency and other corporate governance-related matters. Typically, buy-side legal due diligence involves utilising publicly available information and any information made available by the seller as part of the tender/auction process. Where a target is prepared to support the oɈer, bidders may also present separate requests in respect of matters on which they require further information. Such legal due diligence is usually secondary to Änancial (including taxation) due diligence.

With a hostile bid, legal due diligence is generally limited to information in the public domain. However, a bidder may be able to obtain information from the target that has been provided to a competing bidder if the Takeover Code applies. This is because the target has a duty to provide equal information to rival bidders in a competitive situation.

Public information available to bidders in Jersey includes:

• audited accounts (for public companies only);
• memorandum and articles of association;
• details of directors and shareholders;
• prospectuses; and
• other information that may be available via UK sources, such as public announcements issued by the target.

4.2 Vendor Due Diligence

Vendor due diligence (VDD), as part of private equity transactions, depends almost entirely upon the shape of the target group structure and the target asset or business.

VDD is often not comprehensive, and, in Jersey, it is not generally considered a substitute for a buyer's own due diligence. A VDD report may provide a helpful start to the due diligence process. An obvious advantage is where a vendor is prepared to make representations and warranties, or provide indemnities, in the transaction documents in relation to information contained in the VDD report. Typically, sell-side legal advisers present VDD reports as being based on a risk review mandated by the seller/target group, in contrast to a deeper-dive diligence exercise.

It is not common for advisers to permit reliance on buy-side diligence reports in Jersey to Änanciers or warranty and indemnity (W&I) insurers. However, it is typical for buy-side advisers to liaise with both Änanciers and insurers on behalf of bidders, to address and provide comfort around speciÄc legal issues that may arise as part of Änancing or the writing of a buyer's W&I policy.

5. Structure of Transactions

5.1 Structure of the Acquisition

Most private equity acquisitions in Jersey are structured as private treaty sales with purchase agreements negotiated between the parties. However, there has been an increase in the use of the Jersey statutory merger procedure to eɈect both private and public acquisitions in recent years. Competitive auction processes are common in the infrastructure space, where prime assets are coveted.

Larger transactions involving a Jersey target company or listed targets may proceed by way of a court-sanctioned scheme of arrangement, or a takeover process governed by the Takeover Code. The Takeover Code, and the appointment of the Takeover Panel to administer provisions thereof, have been adopted in Jersey through the enactment of domestic legislation. Other acquisition types include statutory mergers and business asset transfers, although these are less frequently encountered.

5.2 Structure of the Buyer

Straight-line Jersey private company acquisition structures are preferred by private equity sponsors and co-investors.

Tiered Jersey debt and equity acquisition structures involving a topco (top holding company), midco (intermediate Änancing vehicle) and bidco (bid vehicle) are typical. Such structures have the following attributes:

• they enable structural subordination of intra-group/ external Änancing;
• they facilitate the requirements of both private equity sponsor and target management;
• they provide UK-resident-non-UK-domiciled target management with remittance-based taxation options for future exit (eg, capital gains taxation);
• they allow for simpliÄed dividend Åows to private equity fund investment vehicles and ultimately limited partnership (LP) investors; and
• they should not be subject to onshore tax/stamp duty on future disposal.

In addition, the use of Jersey management incentive planning (MIP) vehicles for manager incentivisation aligns target management objectives with those of the private equity sponsor.

Recent years have seen a signiÄcant increase in the use of MIP vehicles for the many incentivisationrestructuring rounds that have occurred where portfolio company assets are in the buy-and-build phase.

5.3 Funding Structure of Private Equity Transactions

Generally, private equity transactions are Änanced via a mix of equity contributions sourced from investing private equity funds and external debt/leverage provided by syndicate banks, institutional Änanciers and a range of alternate credit providers. For larger transactions, accessing funding from the debt capital markets (ie, bridge to bond) is attractive from a costof-funds perspective. Unitranche Änancing, which involves a hybrid loan structure combining senior and subordinated debt into one loan facility at a blended interest rate, has also proved attractive to private equity sponsors.

Interest rate movement and the high margin cost of vanilla leveraged Änancing options has led the most active sponsors to seek out alternative and mezzanine-style credit solutions. This has impacted credit committee consideration of new money transactions, resulting in more protracted come-to-market periods. For alternate credit funding of private equity acquisition transactions, it is relatively common for private debt funds to have agreed to provide committed capital at signing. The eɉciency associated with not having to syndicate or take out bilateral debt postcompletion has driven this particular behaviour.

Both fund-level and leverage Änancing options feature signiÄcantly in downstream private equity transactions involving Jersey vehicles. Market conditions have enhanced the attractiveness for private equity sponsors of participating in leverage Änancing solutions as alternate credit providers. At signing, an equity commitment letter is used to provide contractual certainty of funds for sponsor contributions. For higher-value transactions, it is common to see debt and security documents agreed by signing (but left unexecuted) and conÄrmations given by the buy-side in relation to this to provide comfort to sellers.

5.4 Multiple Investors

Both joint venture and syndicated consortium investor transactions are common in Jersey, particularly in infrastructure asset deals. While not entirely "commonplace", the steady rise in pre- or post-closing co-investments involving multiple private equity sponsors, or sponsors and their most valued limited partners, is starting to represent a greater proportion of all private equity deals.

Co-investment structures are an increasingly popular way to syndicate the sponsor equity contribution to be made. It is not uncommon to see primary investment opportunities initially involve private equity sponsors acquiring minority interests in target groups pending enterprise valuation adjustments and similar. Joint venture-style arrangements between private equity fund sponsors and corporate investors are increasing in frequency.

There was a deÄnite uptick in North American sponsors involving corporate, sovereign and/or sector speciÄc co-investors in the early stages of a proposed transaction. It is understood that this assists with bidder proÄling in granting exclusivity, or as part of participating in a competitive auction process.

6. Terms of Acquisition Documentation

6.1 Types of Consideration Mechanism

There is generally no restriction on the type of consideration that can be oɈered on a private treaty sale or negotiated oɈer. Consideration can therefore include, among other things, cash, loan notes and shares. In a Takeover Code-governed transaction, for a mandatory oɈer, the consideration must be cash, or be accompanied by a cash alternative, and it must comply with minimum consideration requirements. The nature of the underlying asset, sponsor approach/ appetite and certain transaction-speciÄc requirements are all factors that contribute to the form of consideration structure used in Jersey private equity deals. No predominant form of consideration structure is used in these types of transactions: Äxed-price, locked-box and completion accounts mechanisms are variously seen.

The protection aɈorded by private equity buyers and sellers in relation to the consideration mechanism is generally the same as the protection provided by corporate buyers/sellers. This includes earn-outs, deferred consideration, anti-embarrassment mechanisms and (less frequently) consideration collateral or security.

6.2 Locked-Box Consideration Structures

The use of locked-box consideration structures in Jersey private equity transactions is not predominant. The speciÄc features and uniqueness of each separate transaction generally determine whether a completion accounts or locked-box consideration mechanism is employed. Levying interest charges on any value leakage that is not permitted leakage is not common or market standard in Jersey.

6.3 Dispute Resolution for Consideration Structures

In many private equity transactions, locked-box consideration structures do not have speciÄc dispute resolution mechanisms. In deals where completion accounts are required, speciÄc dispute resolution mechanisms are more common, where either party may refer a dispute for determination by an independent expert or auditor. General dispute resolution provisions under a share sale and purchase agreement often refer to arbitration proceedings, as agreed between the parties.

6.4 Conditionality in Acquisition Documentation

Conditionality is standard in private equity transactions and would include any necessary shareholder and regulatory (including competition or antitrust) approvals, and other matters that are not within the bidder's control or are dependent solely on the bidder's subjective judgement. Conditionality for Änancing and other kinds of third-party consents is less frequent.

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Originally published by Chambers and Partners

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