Talking heads: Ireland seeks premier league membership for private assets


How will the independent non-executive director (INED) role change as a result of CP86?
While the ‘Dear Chair’ letter and the high-level findings from the CBI’s thematic review of governance, management and effectiveness of fund management companies have provided a lot of detail and clarity on the organisation, structure and resourcing of fund management companies (FMCs), how it will impact the role of the INED is somewhat less certain.

The role and responsibilities of the board and directors of FMCs are included and detailed in the CBI’s December 2016 FMCs Guidance, and those remain relevant and unchanged. The role of the INED as the guardian of the investor and the champion of investor protection remains paramount. In my mind, the findings of the thematic review restates, highlights and provides welcome clarification on how the appropriate delivery on those roles and responsibilities should be evidenced. The purpose of the thematic review findings is to be an agent of change and it will be. All FMC boards are currently looking at their organisation, structure and resourcing.


What alternative asset classes will be of most interest in Ireland in 2021?
Developments in Ireland’s regulatory landscape combined with global trends will see continued focus on alternative investment asset classes in addition to traditional cross-border distribution vehicles, such as the tax-transparent Common Contractual Fund.

Use of private debt and private credit fund structures will continue growing, spurred by factors including the ongoing low-interest-rate environment and volatile returns on traditional asset classes.

The enactment of the ILP act in December paves the way for significant growth across Ireland’s private equity, infrastructure, renewables and real estate offerings. The reform aligns Ireland more closely with other leading alternative fund jurisdictions, and coincides with the broader global trend for growth in private capital funds which offer the advantages of portfolio diversification away from volatile markets.


What are clients’ biggest regulatory concerns for 2021?
The most urgent concern is how managers incorporate ESG risks into their investment process before March 10. The largest concern is compliance with the CBI’s CP86 ‘Dear Chair’ letter. The review found that not all managers had fully implemented their framework and ensuring compliance will be a key focus and challenge.

Key areas of focus for the CBI in its work with the European Securities and Markets Authority are fund liquidity, leverage, performance fees and costs generally, and treatment of errors with an increasing threat of enforcement.

What impact will the updated ILP Act have on Ireland’s funds market?
It brings Ireland into the premier league when it comes to competing in the market for private equity, private credit and other real economy asset classes which are typically structured as partnerships. Obtaining brand recognition and ensuring regulatory support for the product will be critical to the success of the ILP in its first year. If this is achieved, it will have a major impact in allowing managers to domicile these funds in Ireland alongside their other product ranges rather than in Luxembourg or offshore.


How has CP86 affected Ireland’s ManCo market?
We have seen this move before in Luxembourg. The CBI has made it very clear that even the smallest and simplest ManCos including SMICs must have a minimum of three full-time equivalents. This will lead to firms deciding to set up their own ManCo with boots on the ground in Ireland, or appointing a third-party ManCo. Given the increasing complexity of the regulatory environment and the EU substance requirements, ManCos must have significant financial and human resources coupled with sophisticated technology to effectively manage their regulatory obligations.

Which asset classes will be of most interest in Ireland in 2021?
Undoubtedly the launch of the ILP will bring significant opportunities in the private markets space. European investor demand for products offering yield remains strong, with private debt and infrastructure strategies proving popular. Significant opportunities will abound in real estate as the market responds to the impact of Covid-19 on working and travel arrangements.

In the liquid [assets] space, we’ll continue to see growth in ESG-related strategies. Investor demand in this area is reflected in the welcome announcement by the Net Zero Asset Managers group of their commitment to support and accelerate the transition towards global net-zero emissions.

© 2021 funds europe

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