A new partnership structure will boost the attraction of Irish real and private asset funds internationally, closing a gap with Luxembourg. Our panel of Ireland fund experts talks about this, plus anti-money laundering and CP86.
Lisa Kealy (Chair, Irish Funds Council, and Irish wealth and asset management leader, EY)
James McEvoy (Country executive, 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 be a premier league player in the private assets industry and the introduction of the Irish Limited Partnership Act should aid this. What are the strengths of this piece of legislation and how will it aid Ireland’s ambition?
Lisa Kealy, Irish Funds – If we look at where we are today, I’d say Ireland is a leading domicile for alternative investment funds [AIFs] in Europe, with about 17 of the top 20 asset managers already located here and approximately 40% of the world’s AIFs assets administered in Ireland. The ILP, which is an enhanced partnership vehicle, will aid our position.
It has been modelled on popular partnership vehicles elsewhere and is a huge piece of good news for our industry in that it solidifies our position as a base for real assets and private assets, and will enable Ireland to enhance our position as a green financing centre for renewable energy, energy efficiency, carbon capital and climate transition finance projects.
James McEvoy, Alter Domus – The structure is ideal for private asset funds. It is a capitalised 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, which was brought about in the 1990s, had some limitations that have been apparent through limited take-up over the years, so these enhancements now give us a fit-for-purpose partnership regime.
Particularly there have been improvements to ‘safe harbour’ rules around which actions LPs can take without being considered as part of the management of an ILP. There is the ability to operate umbrella funds with an ILP, so you can have segregated sub-funds within the partnership structure.
You can now also change the terms of the limited partnership agreement with majority consent as opposed to unanimous consent. This suits market requirements better.
Colm Callaly, Amundi – We have done a detailed comparative analysis now of the two leading jurisdictions based on the innovations introduced by the ILP 2020 Act. We see it as a levelling-up of Ireland versus Luxembourg.
I think today there are approximately six ILPs compared to around 2,000 in Luxembourg; we expect that number in Ireland to increase dramatically over the next few years. Our real assets team in Paris now regard the differences between the two regimes as being minimal and it’s primarily down to investor choice and investor appetite for particular types of vehicles.
Conor Meehan, Link Fund Solutions – Ireland has good experience in LP accounting and structures from a service-provider point of view. If you go back even to the late 1990s/early 2000s, Delaware LPs were quite common in hedge fund administrators, so some service providers would have sound experience and good systems around this.
Also, if all the service providers are already approved, the time to market under the 24-hour authorisation process should be a real positive for those able to do this. The AIFM can also avail of the pan EU-market using passporting.
The fact that we have this structure now means that asset managers in other common law countries, who are used to the ILP concept – such as the US, UK and Hong Kong – could be interested in an EU product which should play into Ireland’s strength and ambition around private assets.
McEvoy – Important clarity has also been brought to regulation for closed-ended funds, not solely focused on the ILP but across the suite of fund products in Ireland. This allows greater flexibility around how investors come into funds, such as investor tranching, and also GP carry, in line with the market. Again, these were the sorts of issues that when you got down and deep into discussions on potentially using Irish fund structures, this is where some of the challenges lay and a lot of those challenges are now cleared.