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A steady flow of company redomiciliations kept Jersey corporate practitioners busy over the past 12 months. The jurisdiction has become the preferred choice to establish holding companies for listing on the LSE....

A steady flow of company redomiciliations kept Jersey corporate practitioners busy over the past 12 months. The jurisdiction has become the preferred choice to establish holding companies for listing on the LSE. While principally it is UK firms that are the main ones to move their headquarters to Jersey, practitioners have gradually seen an increasing trend of businesses moving from India, China or Africa.

"They need to have companies that investors are comfortable with, and meet the requirements for listing on the stock exchange," says one practitioner. "Jersey companies are very similar to English companies. They have more flexibility, less complication, zero tax, and they tend to be chosen for the purpose of listed holding companies."

In the capital markets, IPOs were one of the hot topics in Jersey last year with the market seeing a surge in natural resources companies from emerging markets setting up Jersey vehicles to place their IPOs on the LSE or Hong Kong Stock Exchange.

"I think natural resources is a booming area and anything to do with commodities, or oil, metal and gas is very popular for investors," says one lawyer, while another one adds: "Due to the state of the equity capital markets, not all IPOs made it to market, but we expect further IPOs using Jersey holding companies during 2011." There has also been a reasonable amount of debt work over the last year.

On the banking side, there has been an expected continuation of restructuring and refinancing work with the banks still cautious about lending, despite political pressure from the UK's coalition government. The UK commercial property market, an area that Jersey practitioners have a lot of involvement in, is also still depressed. "The reality of new money deals is that they are still relatively flat," says one lawyer. "It's a continuation of restructuring advice, and some enforcement work as well, where banks decide they were actually enforcing their security, and takeover the assets. The restructuring work is still outweighing the new money deals." While another adds: "We see significant activities in refinancing existing loan transactions or existing banks amending and restating existing facilities."

Structured finance lawyers are also predicting restructuring in the field of CMBS: "CMBS is suffering at the moment because they've difficulties refinancing themselves. It's to do with the decline of the property valuation," says one partner.

The market suggests that there is a pick-up in new fund raising activities over the last six months in Jersey, after a two to three year lull period."Certainly in the last six months we see much stronger pipeline of activities, including new projects we were talking about a couple of years ago, which were put on hold," says one partner....

The market suggests that there is a pick-up in new fund raising activities over the last six months in Jersey, after a two to three year lull period.

"Certainly in the last six months we see much stronger pipeline of activities, including new projects we were talking about a couple of years ago, which were put on hold," says one partner. This pick up is for one simple reason: "It's all about confidence," says one funds lawyer, "People have the opportunity to assess and regroup following the financial crisis, now they're ready to invest again."

Instead of new funds managers coming in, practitioners indicate that existing promoters have done most of the jobs. "In terms of new funds establishment in the market as a whole, there's a number of existing managers who launched new funds, and also there's a number of private-equity houses, in particular, who're currently in the process of raising new money,

Together with the private-equity funds, alternative funds remain market favourites among investors and practitioners have also seen a shift to emerging markets: "The areas we've seen activity is in the emerging markets, where we set up funds for investments in the region, we've seen activities in infrastructure and real estate," says one partner.

Fund migration from other jurisdictions to Jersey has also increased: "There has been a lot of enquiries that way, I suspect that's going to be a growing trend," says one partner and another lawyer agrees: "Compared to the year from 2009 to 2010, we see an increase of funds moving from Caribbean to the Channel Islands in the last 12 months."

The reasons behind this are essentially a need for regulation: "I think the reason for that is slightly better market perception in terms of regulation for the Channel Islands. Sometime funds managers need to provide a better regulated product to certain type of clients, and so they may choose to establish these funds in the Channel Islands rather than in the Caribbean."

Work coming from onshore funds centres has also increased: "What we see more is fund managers looking to migrate from onshore, that is the UK, to offshore, to places like Jersey, Guernsey or to Switzerland, so the actual managers themselves have relocated," says one partner.

A major talking point in the last few years has been the Alternative Investment Funds Managers Directive (AIFMD), proposed by the European Commission to cover AIFMs' regulatory framework within the EU, Jersey practitioners are quite positive towards its position in marketing Jersey-based funds into Europe. "I think there is now more certainty over the AIFMD, which results in confidence that Jersey and Guernsey will continue to benefit from private placement exemption, and in due course should be approved in jurisdictions which will benefit from passporting," explains one funds lawyer.

The expected increasing level of fee for funds establishment on the continent is also placing the Channel Islands in a better position: "One of the consequences of the directive is going to be to quite significantly increase clients' burden, and that might lead to onshore EU funds managers becoming more expensive to set up funds within the EU jurisdictions," says one partner. "We think once arrangers find out that how much more difficult would be, it will make Jersey relatively even more attractive than it has been."