Thu, 27/11/2008 - 17:22
Having looked after private equity business in Guernsey for over two decades, Northern Trust has 'exported' its capability to Jersey.
The decision to establish a private equity fund administration team in Jersey in the first quarter of 2008 stemmed from various factors: demand from fund promoters wishing to domicile funds there, our reputation in that and other jurisdictions, the favourable legal and regulatory environment, and a strong infrastructure of legal and audit services with specialist private equity expertise. Northern Trust looks to replicate in Jersey the excellent private equity client reputation it enjoys in Guernsey.
The new servicing hub also reflects the preference of many clients for a single service provider with a global platform and the ability to operate in multiple jurisdictions. Globally, Northern Trust private equity fund administration fits that profile, with 57 promoter clients, 725 fund-related entities serviced, some USD35.5bn in private equity assets under administration and total committed capital exceeding USD75bn serviced from a growing number of centres.
Northern Trust has the advanced technology on which clients place high importance, having used the leading private equity administration system for nearly a decade. It plans to spend more than USD1bn overall in the next few years on technology enhancements across the group.
Global investors look for evidence of deep experience and knowledge coupled with effective operational platforms geared to multi-jurisdictional needs. Gone are the days when clients would appoint an administrator simply on the basis of a friendly recommendation. Instead they conduct extensive due diligence and demand independent review reports such as SAS 70 certification to confirm a provider's operational excellence. They also require substantive activity on the ground, not just a shop window, in jurisdictions where funds are domiciled.
The new focused private equity capability complements Northern Trust's existing fund administration office in Jersey, which was established in 2004. The private equity team benefits from this existing experience along with Northern Trust's long-established private equity administration operation in Guernsey, regarded as the global best practice model for its other servicing centres in Ireland and Chicago. Care has been given to identifying the right team to replicate the existing service model as well as meeting regional needs.
The private equity team in Jersey already administers funds with more than USD1bn in committed capital, allowing Northern Trust to build further on its existing private equity business and to develop its long-term presence in Jersey.
Jersey has an international reputation for long-term stability. Its legal environment offers the limited partnership and other structures required by the industry, including regulatory regimes such as the light-touch Expert Funds, the new Unregulated Funds and private arrangements. In addition, the legal system provides the certainty of well-established statute and case law should problems ever arise during the life of a private equity fund.
An important factor is the knowledge and expertise embedded in the local workforce in Jersey, as a leading international fund administration jurisdiction for more than two decades and particularly known for its ability to service alternative assets such as real estate and private equity.
Being nimble in terms of regulation and having people who can adapt to changing structures and requirements quickly will serve Jersey well in an environment where expertise and professionalism are more than ever in demand from clients.
Graeme McArthur is managing director of Northern Trust International Fund Administration Services (Jersey) and Joel Haskins is head of private equity in Jersey
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