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JFA Dinner 2011

JFA Dinner 2011. Update on the Funds Industry Globally and in Jersey By Nigel Strachan, Chairman of the JFA. 2010 – what happened?. Difficult year for funds globally but Jersey still showing steady growth Globally, funds suffered – 3 things lacking: Leverage Liquidity

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JFA Dinner 2011

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  1. JFA Dinner 2011 Update on the Funds Industry Globally and in Jersey By Nigel Strachan, Chairman of the JFA

  2. 2010 – what happened? • Difficult year for funds globally but Jersey still showing steady growth • Globally, funds suffered – 3 things lacking: • Leverage • Liquidity • Clarity with regards to international regulation • How did we get here?

  3. Last 5 years… Before 2005: pre credit bubble • Steady growth in the global and Jersey funds industry • In line with growth in leverage available for PE and Real Estate deals 2005 – 2007:the credit bubble • Proliferation of cheap leverage available • Many more players entered the funds market • Record prices & multiples of leverage • David Rubenstein, Carlyle

  4. 2008… • Feb 2008 - Northern Rock nationalised • Mar 2008 - Bear Stearns collapsed and was bought by JP Morgan Chase $10 per share • Sept 2008 - Lehman forced to file for chapter 11 bankruptcy protection • Oct 2008 - US authorised $700Bn bailout bill & Iceland’s banks are nationalised • Nov 2008 - Citigroup stock crashes 60% in 1 week – US government agrees bail out • Dec 2008 - Bernie Madoff arrested for $50Bn Ponzi scheme

  5. 2008… Outraged Lehman employees stage a protest by blocking the entrance to the bank’s headquarters…

  6. 2009… • Jan 2009 - RBS announces biggest loss in UK corporate history & government takes controlling stake • Mar 2009 – Lloyds Banking Group • Banks constrained - corporate leverage dried up • Fewer deals in the market, both in value and volume • Workouts and restructuring become major themes for most funds globally and in Jersey • Funds with dry powder – good time to invest

  7. 2010 Fund Activity Globally • Deal activity rebounded,$1 trillion of dry powder + expiring investment periods = pushed prices up • Credit conditions improved + but high prices made funds active shoppers but reluctant to close deals • Exits gained real momentum in Q4 • Secondary transactions between funds • Confidence in the economic recovery grew • Strong equity markets created better conditions for corporate acquisitions, funds and IPOs

  8. 2010 Fund Activity Globally • Fund-raising conditions remained challenging • Tight allocations to alternatives • Lack of clarity on the AIFMD

  9. 2010 Fund Activity in Jersey • Q3, Q4 2010 - NAV of funds administered in Jersey increased by £8.8bn (up 5%) from £175.9bn to £184.7bn – 6 quarters of growth • Q3, Q4 2010 - total number of funds in Jersey increased by 54 from 1,287 to 1,341.The total number of unregulated funds increased to 122 (year on year growth of 100%) • Q3, Q4 2010- the asset value of private equity funds administered grew by £6bn (18.4%) • Quality and substance

  10. JFA 2010 / 2011 • Products and Strategy • Working with industry to ensure range of products and strategic direction for Jersey funds in line with market demand • Education • Full calendar of monthly seminars for 2011 • Legal & Technical • Consultation with industry, JFSC and Jersey Finance on a no. of issues to include Codes for Funds and the Prospectus Order • Working with JFSC to ensure regulation is appropriate for alternatives within the IOSCO framework • Working toward s AIFMD implementation

  11. JFA 2010 / 2011 • Marketing • Profile • Conferences (Super Return, EuroHedge and Real Estate) • London Funds Event • New branding and web site • Strong brand for JFA - more easily recognisable by our target audiences • New website www.jerseyfunds.org

  12. 2011 Good News for Jersey • Existing clients - AIFMD agreed compromise text is positive for Jersey + greater certainty for Jersey funds marketing into the EU • - Private placement to continue at least to 2018 • - Passports from 2015(if needed) - Jersey is well placed to comply with the requirements to obtain a ‘passport’ • New clients - funds raising money outside EU - Super Return Berlin – mood and feedback

  13. 2011 Good News for Jersey • New separate and incorporated limited partnerships - to be introduced imminently in Jersey, and these will provide yet further choice for fund managers • Jersey still ranked the highest of all the offshore jurisdictions – 4th consecutive year &recognised by the IMF as being in the ‘top division’ of international finance centres • Conclude

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