A new partnership structure will increase the attractiveness of Irish real and private asset funds internationally and close a gap with Luxembourg. Our panel of experts on Ireland funds will discuss this, as well as anti-money laundering and CP86.
Lisa Kealy (Chairman of the Irish Funds Council and Head of Irish Wealth and Asset Management, EY)
James McEvoy (Country Management, Ireland, Alter Domus)
Colm Callaly (Head of Legal, Ireland and Global Head of Distribution Legal, Amundi)
Conor Meehan (Managing Director, Link Fund Solutions)
Funds Europe – Ireland’s ambition is to become a leader in the private wealth industry and the implementation of Ireland’s Limited Partnership Act should help. What are the strengths of this legislation and how will it help Ireland’s ambitions?
Lisa Kealy, Irish Funds – If we look at where we are today, I would say Ireland is a leading destination for alternative investment funds [AIFs] in Europe, where around 17 of the top 20 asset managers are already based and around 40% of global AIF assets are managed in Ireland. The ILP, an enhanced partnership tool, will support our position.
Modeled after popular partnership tools elsewhere, it is great good news for our industry as it solidifies our position as a real and personal asset base and will enable Ireland to leverage our position as a green finance hub for renewable energy, energy efficiency, carbon capital and funding projects for climate change.
James McEvoy, Old Domus – The structure is ideal for private asset funds. It is a capitalized LP / GP structure that investors are familiar with and it exists as a regulated AIF with access to investors across the European Economic Area. The original ILP, launched in the 1990s, had some limitations that the limited use has shown over the years, so these improvements now provide us with a fit-for-purpose partnership system.
In particular, the “Safe Harbor” rules have been improved, whereby LPs can take action without being considered part of the management of an ILP. It is possible to operate umbrella funds with an ILP so that you can have separate sub-funds within the partnership structure.
You can now change the conditions of the limited partnership agreement with majority instead of unanimous approval. This corresponds better to market requirements.
Colm Callaly, Amundi – We have now carried out a detailed comparative analysis of the two leading jurisdictions based on the changes introduced by the ILP 2020 law. We see it as a leveling of Ireland versus Luxembourg.
I think there are around six ILPs today compared to around 2,000 in Luxembourg; we expect this number in Ireland to increase dramatically over the next few years. Our Real Assets team in Paris now considers the differences between the two regimes to be minimal and is primarily due to investor choice and investor demand for certain types of vehicles.
Conor Meehan, Link Fund Solutions – Ireland has good experiences with LP bookkeeping and structures from the perspective of the service provider. If you go back even as far as the late 1990s / early 2000s, Delaware LPs have been widespread among hedge fund administrators, so some service providers have solid experience and good systems in this area.
While all service providers are already approved, the time to market under the 24 hour approval process should be really positive for those who are able to. The AIFM can also use the pan-EU market by means of passporting.
The fact that we now have this structure means that asset managers in other common law countries that are used to the ILP concept – such as the US, UK and Hong Kong – might be interested in an EU product that has the strength Ireland’s should play off and ambition around private wealth.
McEvoy – Important clarity has also been provided on the regulation for closed-end funds, which focus not only on the ILP but on the full range of fund products in Ireland. This allows for greater flexibility in the way investors get into funds, such as B. Investor tranches and GP-Carry, in line with the market. Again, these were the kind of issues that when you got into discussions about the potential use of Irish fund structures, here were some of the challenges and many of those challenges are now resolved.