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.orgwww.jerseyfunds.org

13. 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

14. 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 – 4 th consecutive year & recognised by the IMF as being in the ‘top division’ of international finance centres Conclude 2011 Good News for Jersey