The choice of domiciliation can make or break a fund’s success and, as attitudes and practical conditions in the business environment change, there are still enormous opportunities for driving capital in Africa.
Those were among the findings of a report by African Business magazine, commissioned by Jersey Finance, entitled South African Fund Managers: Trends in Fund Domiciliation and Capital Raising.
To produce the report, African Business surveyed more than 60 C-suite or partner-level executives, investors (LPs) and fund managers (GPs) operating in jurisdictions worldwide with a connection to South African managers.
The objective was to explore emerging global trends in fund domiciliation and capital raising, particularly as a route for private equity impact investing into the wider African continent.
The research found that in a rapidly evolving global market, the choice of fund domiciliation has become an increasingly salient issue for investors and fund managers, with choice of jurisdiction being led by LPs and the quality of a jurisdiction’s legal and regulatory framework the most important factors in their minds.
It also found that the opportunities for capital raising in Africa are substantial – the past two years have seen unprecedented foreign direct investment commitments to Africa as the region becomes more economically and politically strategic.
To assist in facilitating this growth, the research suggests IFCs must extend their financial expertise into these investments, alongside private and institutional investors, in a cost and tax-efficient setting – with support from development finance institutions.
Allan Wood (pictured), Global Head of Business Development at Jersey Finance, said: “This research follows our 2015 report, Jersey’s Value to Africa, where the opportunities to facilitate capital flows into the continent were explored at a macro level.
"IFCs that can demonstrate high standards of corporate governance and provide guaranteed and seamless market access, such as Jersey, will play a vital role in sourcing overseas capital securely and efficiently to help support economic growth and job creation in Africa.
“Fund managers, particularly in South Africa, are increasingly turning to IFCs that have experience in navigating global regulation and compliance requirements. In fact, South African managers now account for the eighth largest pool of capital globally in respect of Jersey-based fund promoters.”
Elliot Refson, Head of Funds at Jersey Finance, added: “We are in no doubt there is a huge opportunity for Jersey in South Africa. Investors want a jurisdiction with political and fiscal stability, with a no-change outlook from a regulatory, legal or economic perspective – and Jersey ticks these boxes.”
• The full report can be found here