www.globalfundmedia.com | 2
CONTENTS
IRELAND GFM Special Report May 2018
Managing Editor: James Williams, james.williams@globalfundmedia.com
Managing Editor (Wealth Adviser, etfexpress & AlphaQ): Beverly Chandler, beverly.chandler@
globalfundmedia.com; Online News Editor: Mark Kitchen, mark.kitchen@globalfundmedia.com
Deputy Online News Editor: Mary Gopalan, mary.gopalan@globalfundmedia.com
Graphic Design: Siobhan Brownlow, siobhan.brownlow@globalfundmedia.com
Sales Managers: Simon Broch, simon.broch@globalfundmedia.com;
Malcolm Dunn, malcolm.dunn@globalfundmedia.com;
Sales Manager, Property Funds World: Matthew White, matthew.white@globalfundmedia.com
Marketing Administrator: Marion Fullerton, marion.fullerton@globalfundmedia.com
Head of Events: Katie Gopal, katie.gopal@globalfundmedia.com
Chief Operating Officer: Oliver Bradley, oliver.bradley@globalfundmedia.com
Chairman & Publisher: Sunil Gopalan, sunil.gopalan@globalfundmedia.com
Photographs: Shutterstock & courtesy of IFSC; Failte Ireland
Published by: GFM Ltd, Floor One, Liberation Station, St Helier, Jersey JE2 3AS, Channel Islands
Tel: +44 (0)1534 719780 Website: www.globalfundmedia.com
©Copyright 2018 GFM Ltd. All rights reserved. No part of this publication may be reproduced,
stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical,
photocopying, recording or otherwise, without the prior permission of the publisher.
Investment Warning: The information provided in this publication should not form the sole basis
of any investment decision. No investment decision should be made in relation to any of the
information provided other than on the advice of a professional financial advisor. Past performance
is no guarantee of future results. The value and income derived from investments can go down as
well as up.
Publisher
In this issue…
03 Updated Irish structure set to attract
new wave of private equity managers
By James Williams
06 Inside the mind of a fund administrator
Interview with Barry O’Brien, Quintillion
09 New loan origination QIAIF regime –
finally a viable option?
By Gayle Bowen & Aongus McCarthy, Pinsent Masons
14 Reducing the middle- and back-office
burden
Interview with John Hynes, HedgeFacts
17 Changing times in Irish funds
By Mark Crossan, Bridge Consulting
21 Fund governance changes loom large
By Keith Parker, Link Asset Services
IRELAND GFM Special Report May 2018 www.globalfundmedia.com | 3
Ireland’s investment funds industry shows
no sign of slowing with total AUM reaching
EUR2.4 trillion by end of 2017. That’s a 16 per
cent growth year-on-year and represents a
new high watermark for the jurisdiction, as
alternative fund managers continue to set up
UCITS and QIAIFs.
That growth was underpinned by an
exceptional year of net sales into Irish funds.
“There was EUR298 billion of net sales
in 2017, more than twice the 2016 number.
Some EUR242 billion net sales went into
UCITS and EUR56 billion into AIFs. The
overall aggregate AUM of QIAIFs is now
EUR476 billion, which represents a 14 per
cent annual increase,” says Kieran Fox,
Director of Business Development at Irish
Funds, which promotes the attractiveness of
the jurisdiction to global fund managers.
According to the Central Bank of Ireland,
in terms of breakdown every sub-category of
AIF attracted net sales last year and as Fox
remarks, the QIAIF is very much the “flagship
fund type for alternative strategies”.
Fox confirms that the large majority of
new fund launches are ICAVs.
OVERVIEW
Updated Irish
structure set to
attract new wave of
PE managers
By James Williams
IRELAND GFM Special Report May 2018 www.globalfundmedia.com | 4
OVERVIEW
“Pre-existing funds, which were launched
as corporate structures, will often wait until a
convenient time i.e. when planned changes
are being made to the fund that require
shareholders’ approval. At that time, they
may look to convert the structure to an ICAV.
“We always expected interest in the ICAV
to be strong. There was a lot of demand for
that type of structure. The ICAV came on
stream in March 2015 and since that time
assets have grown to EUR97 billion, of which
EUR32.3 billion are in UCITS and EUR64.7
billion are in non-UCITS. In fact, ICAVs have
had positive net flows every month since
inception,” says Fox.
What is particularly encouraging for
Ireland is that the number of PE/RE funds
being set up is rising. This is no longer a
jurisdiction that hedge fund managers turn to
for a European regulated fund solution.
It helps that the Investment Limited
Partnership is being enhanced through
amendments to the Investment Limited
Partnership Act, 1994. This will be referenced
in more detail later in the report, but in effect
this 2.0 version of the ILP should, once the
amendments have been approved by the
Irish Government, make Ireland even more
competitive, from a PE/RE perspective.
“I think that is going to make a big
difference to the attractiveness of Ireland
as a jurisdiction,” comments Donnacha
O’Connor, Partner at law firm Dillon Eustace.
“In the interim, there are some partnership
structures being set up but in the main
managers are choosing to use the ICAV.
Alternative funds in a non-UCITS format
are being established at a greater rate than
UCITS and there is particular growth in the
PE/RE area. We think that there is a lot of
opportunity and that there will be a lot of
growth in those areas over the next couple
of years.”
“I haven’t established a single Irish Plc
structure since the ICAV came out,” confirms
Gayle Bowen, Partner, Pinsent Masons
(Ireland). “The ICAV is the structure that
everybody now tends to use. It has a legal
personality, everybody understands it and it’s
more flexible.
“If you are selling it into the US, it checks
the box for US investors. Where someone
will deviate from the ICAV is if an investor
has a very specific tax requirement; then
they might set up a common contractual
fund (CCF) or a unit trust. But otherwise it’s
the ICAV.”
In many respects the Irish Plc, which
would have been the only corporate legal
structure prior to the ICAV, has died a death.
The ICAV is a corporate fund, it has limited
liability and it doesn’t come with the added
corporate law complications that a Plc has.
“The ICAV is definitely the default legal
structure for regulated funds in Ireland at the
moment. Over 450 have been established
since the ICAV legislation was enacted in
March 2015,” remarks O’Connor.
O’Connor confirms that he is seeing
more European real estate focussed funds
being set up in Ireland than funds focussed
on the Irish property market, referencing a
number of ICAVs that Dillon Eustace recently
established that invested in commercial
properties in Italy, UK brownfield sites,
healthcare facilities and in “alternative”
residential sub-sectors such as student
accommodation and social housing.
“The ICAV can access some double
tax treaties or can get the benefit of
some domestic tax exemptions where the
properties are located which can reduce tax
leakage,” he says.
REITs are enjoying some good success
in Ireland, with new announcements such
as Core Industrial REIT plc, backed by
York Capital, one of the first such REITs in
Ireland aimed at capitalising on investment
opportunities in the Irish industrial property
sector.
Existing REITs, such as Green REIT,
announced a 9 per cent increase in NAV for
its full year results in June 2017.
Pat Gunne, chief executive of Green REIT,
said asset values were up to EUR1.4 billion,
which was a good achievement given that
“The ICAV came on stream
in March 2015 and since
that time assets have grown
to EUR97 billion, of which
EUR32.3 billion are in UCITS
and EUR64.7 billion are in
non-UCITS.”
Kieran Fox, Irish Funds
7
Expertise where
you need it
Built on years of experience with foundations
in our award-winning services and leading
technology, our guidance can help drive
your portfolio’s performance in the right
direction. It’s not evolution, just the basics
done better.
Global hedge fund administration made simple
Conversion & Launch Services
Fund Administration Services
Investor Services
Middle Offi ce Services
Risk & Regulatory Services
Tax & Audit Services
For more information about our comprehensive suite of
services, call +353 1 523 8000 or visit quintillion.com.
U.S. Bank does not guarantee the products, services, or
the performance of its affiliates and third-party providers.
©2018 U.S. Bank 042418
www.globalfundmedia.com | 6IRELAND GFM Special Report May 2018
QUINTILLION
Inside the mind of a
fund administrator
Interview with Barry O’Brien
Barry O’Brien, Head of Fund
Client Relations at Quintillion
Interest in Ireland among private debt and
private equity fund managers remains
strong, especially with the highly anticipated
amended Irish Investment Limited
Partnership (ILP), scheduled to be formally
approved later this year.
This is good news for Ireland’s asset
servicers. U.S. Bancorp Fund Services, has
continued to grow its market share in not
only the familiar long/short equity, credit
and managed futures segments but also
private equity and private debt funds and
reinsurance funds.
“Over the last 18 months our assets under
administration have grown from USD117 billion
to USD187 billion. A considerable portion of
that growth has been in these strategies,”
comments Barry O’Brien, Head of Fund Client
Relations at Quintillion, the Europe-based
affiliate of U.S. Bancorp Fund Services.
To support such strategies requires
leading-edge technology, not to mention
automation. This has been a cornerstone of
Quintillion’s operations “and continues to be
so”, says O’Brien. “We utilise Advent Geneva
globally as our core accounting platform and
Geneva World Investor as our private equity
accounting platform, in conjunction with
HWM ManTra on the investor services side.”
Technology, is only as good as the people
supporting it. In that respect, Quintillion’s
motto, ‘smart technology with the power
of experience’, is as true today as it has
been since its inception. Quintillion has
always maintained an enviable service
reputation combined with a robust and
heavily automated IT infrastructure, “with
unmatched staff tenure and staff experience”,
opines O’Brien.
O’Brien confirms that fund managers are
looking for the most effective, automated
back and middle-office capabilities. To that
end, Quintillion has always had in place well
established automation and STP, integrating
several licensed and in-house designed
applications for this purpose.
“These applications provide firm oversight
and operational control as well as workflow
exception management. Companies tend
to forget we are in the service industry and
that people are at the core. Strong talent
should be combined with an automated and
controlled product delivery. Superior service
and a personal touch are key differentiators,”
states O’Brien.
A noteworthy development in Ireland for
Quintillion is its Bank Depositary solution,
which will trade as U.S. Bank Depositary
Services. The firm has had a depositary lite
solution in place to support non-EU funds
being marketed into Europe since 2014 and
currently has some USD14 billion under
depositary lite custody. The wider group has
over USD11 billion in AUA for PE funds.
“This will be a fully authorised Irish
depositary solution and it is due to launch
mid-2018. It will put us on par with our peers
in terms of breadth of services offered and
will be further progression of an institutional
footing for Quintillion as part of U.S. Bank.
“Regulated EU fund products require a
full depositary solution taking care of cash
monitoring, oversight and safekeeping
obligations. Moving forward, hedge fund
administrators, backed by custodian banks, will
become leading edge in terms of the range of
services they are able to offer clients. We have
one of the strongest balance sheets of any of
our peers in the US,” explains O’Brien.
Quintillion has also enhanced its regulatory
reporting services and added collateral
administration services as well as enhanced
OTC reconciliation in direct response to
changing client demands, confirms O’Brien.
With a continued commitment to
broadening its service offering, Quintillion
is a good illustration of what today’s
administrators are expected to do. n
IRELAND GFM Special Report May 2018 www.globalfundmedia.com | 7
OVERVIEW
the REIT has only been in operation for four
years. “That’s up 11 per cent year on year.
One of the key components is rental income
and dividend flows,” Gunne was quoted as
saying by RTE.
REITs are Irish Limited Companies that are
publicly listed. As such, they aren’t regulated.
While they generally fall within the definition
of an alternative investment fund, they do
need to have an appointed AIFM.
Michele Foley is Head of Alternative
Investment Services (Ireland), Northern Trust.
She says that Ireland has been a particular
focus for real estate launches from both
new and existing clients. “We have noted
a recent increase in the use of Real Estate
Investment Trusts (REITs) with some funds
re-designating their status to this tax-efficient
vehicle. REIT structures offer investors a
gross dividend (without deduction of tax) so
long as the fund continues to comply with
certain conditions.
“Structures aside, there is also a
general trend to invest in strategies
with an environmental and/or a social
governance theme, such as alternative
energy developments like wind farms or
solar energy. This may be held as a direct
investment, or in the case of solar energy,
held as part of a physical building as an
alternative investment stream,” says Foley.
As the global surge in real estate investing
continues to build, Northern Trust is busy
driving new products and capabilities to
support a diverse mix of real estate asset
manager clients. The bank has been
supporting RE fund launches from managers
across the globe, seeking a European hub
for their European real estate structures.
“We view ourselves as a strategic
operations partner to our clients; providing
the operational expertise and infrastructure
to enable our clients to focus their time and
resources on their strategy and investors,”
says Foley.
The continued global focus on alternative
asset investment has propelled inflows
from both existing and new clients, helping
Northern Trust achieve a 50 per cent
increase in global real estate assets under
administration over the past 12 months.
On the private equity front, Ireland has
been a focus for technology investing over
the last 12 months, with PE managers
choosing to use Ireland as a tech hub for
their investment strategies.
“There are a lot of international PE
managers active here and there are some
fast growing domestic PE firms. They
are investing in a variety of sectors but
particularly in tech companies. We see them
funding a lot of M&A activity here. They are
also using Irish funds to house their PE and
loan origination strategies,” adds O’Connor.
Since mid-July 2014, EU-based PE fund
managers have fallen within the scope of
the European Alternative Investment Fund
Managers Directive (“AIFMD”). This has
made it a bit more difficult for fundraising in
Europe for non-EU structures, though it is
possible to use depositary lite solutions to
address the brass plating requirements of
Germany and Denmark; notably even where
there is a non-EU Manager and non-EU
PE Fund.
“As a result, many private equity houses
are increasingly looking to Qualifying Investor
AIFs (QIAIFs), as a potential solution to
capital-raising issues within the European
Union. Once you have a QIAIF you don’t
need to go down the route of meeting the
requirements of individual countries like
Germany and Denmark; it’s a readymade
solution,” explains Barry O’Brien, Head of
Fund Client Relations, Quintillion.
The Central Bank has made some
positive changes recently to facilitate the
establishment of PE funds within the context
of the Irish funds regime. PE funds in Ireland
are able to:
• have different asset allocations between
share classes;
• have multiple and longer initial closings;
4
12
“Structures aside, there
is also a general trend to
invest in strategies with an
environmental and/or a
social governance theme,
such as alternative energy
developments like wind
farms or solar energy.”
Michele Foley, Northern Trust
www.pinsentmasons.com
© Pinsent Masons LLP 2018
Local strength, global resource
Pinsent Masons is a full service international law firm with 24 offices spanning 4 continents.
Our Dublin office is now open and through our sector-led approach, our Irish asset management
and investment funds practice works closely with our international offices, combining local
knowledge with global experience, connections and reach.
Given our large global presence, we can advise asset managers on all aspects of the fund establishment process,
marketing, regulation and licensing requirements wherever they do business. In particular, our connected UK and Irish
practices makes us uniquely placed to provide UK managers with a co-ordinated approach to Brexit strategy planning.
This adds real value to our clients in terms of market insight and horizon watching.
For more information visit: www.pinsentmasons.com
www.globalfundmedia.com | 9IRELAND GFM Special Report May 2018
PINSENT MASONS
New loan origination
QIAIF regime – finally
a viable option?
By Gayle Bowen & Aongus McCarthy
Under new rules implemented by the Central
Bank of Ireland (“Central Bank”) last month,
Irish Loan Originating Qualifying Investor
AIFS (“L-QIAIFs”) are now permitted to adopt
broader credit focussed strategies. Previously
L-QIAIFs were prohibited from engaging in
any activities other than lending and ancillary
related operations. This restriction was
generally viewed by industry as the main
obstacle to their growth in the Irish market.
These new changes are widely anticipated
to create new interest in the L-QIAIF product
among asset managers.
What is loan origination?
The funding gap which followed the global
financial crisis, highlighted the need to create
alternative sources of finance outside of
the banking sector. L-QIAIFs can provide
borrowers with alternative and viable credit
lines, whilst offering an attractive risk versus
return profile, when compared against other
more traditional asset classes. However,
due to the fact that loan origination is
treated as ‘shadow banking’ by the Central
Bank, L-QIAIF are subject to more onerous
requirements when engaging in direct loan
originating activities, which we set out in
more detail below.
L-QIAIFs are funds that source loan assets
for their investment portfolio by directly
originating loans, acting as the primary
sole or primary lender rather than confining
themselves to investing via loan assignments
or participations.
The Central Bank has confirmed that
funds that acquire credit or debt instruments,
without directly originating loans (e.g. through
loan participations and loan assignments)
are not subject to the L-QIAIF regime.
The background to the L-QIAIF regime
in Ireland
In October 2014, Ireland became the first
EU Member State to establish a specific
domestic regulatory framework for loan
originating investment funds. However, the
initial regime applied quite stringent rules,
in particular, L-QIAIFs were prohibited from
engaging in activities other than originating
and participating in loans, which was widely
regarded as an overly-restrictive approach by
the Central Bank.
Further enhancements were introduced
in January 2017 to permit L-QIAIFs to also
hold investments connected to the loan
origination strategy, including investing in
debt and equity securities of entities or
groups to which the L-QIAIF originated
loans, which was helpful but did not
address the issue of having a broader multi-
credit focus.
As a result of these restrictions, L-QIAIFs
that wished to invest in other assets, such
as debt or equity securities (other than those
of the borrower the L-QIAIF had lent to),
typically needed to establish as an umbrella
fund and create a separate sub-fund for non-
loan strategies. As a consequence, the take
up of the L-QIAIFs regime in Ireland to date
has been lower than initially anticipated.
Under the new regime, the Central Bank
now permits L-QIAIFs, as part of their core
investment strategy to hold a broad range of
debt or credit instruments and to mix assets
within the same fund.
Gayle Bowen, head of Pinsent
Masons’ Asset Management
and Investment Funds practice
in Ireland
www.globalfundmedia.com | 10IRELAND GFM Special Report May 2018
L-QIAIF regime: applicable requirements
In addition to the general rules applicable to QIAIFs
and AIFMs pursuant to Alternative Investment Fund
Managers Directive (“AIFMD”), Irish law and the Central
Bank requirements, L-QIAIFs must also comply with
additional Irish requirements.
Under the new rules, L-QIAIFs must limit their
operations to the business of:
• issuing loans;
• participating in loans;
• investment in debt/credit instruments;
• participations in lending; and
• to operations relating thereto, including investing
in equity securities of entities or groups to which
the L-QIAIF lends or instruments which are held for
treasury, cash management or hedging purposes.
Benefits of the L-QIAIF regime in Ireland
The following are some of the key benefits of the new
L-QIAIF regime in Ireland:
Fast-track
Regulatory
Authorisation
L-QIAIFs can avail of a fast track
twenty four (24) hour authorisation
process
Transparent
Regulatory
Framework
L-QIAIFs are fully regulated by the
Central Bank in accordance with
AIFMD
EEA Marketing
Passport
L-QIAIFs can avail of the AIFMD
pan-European passport and be
sold under a quick notification
process across the EEA to
professional investors
Choice of
Multiple Legal
Structures
L-QIAIFs may be established
using a variety of legal structures,
including an Irish Collective Asset-
management Vehicle (ICAV), a
public limited company (PLC), a
unit trust, a common contractual
fund (CCF) or an Irish Limited
Partnership (ILP). L-QIAIFs may be
established with segregated liability
between sub-funds
Proposed changes to Irish ILP legislation will
further enhance the L-QIAIF regime
The Investment Limited Partnership (Amendment) Bill
(the “ILP Bill”) proposes to modernise and update the
partnership law in Ireland to create a more flexible
vehicle that can be used by L-QIAIFs.
The proposed new ILP structure offers many
enhanced features over the existing partnership
PINSENT MASONS
• AIFMD compliant AIFM – L-QIAIFs must designate
a fully authorised AIFM, which can be external
or the L-QIAIF itself, ie, internally managed (sub-
delegation of investment management is permitted).
• Liquidity and Distributions – L-QIAIFs must be
closed-ended and established for a finite period,
however distributions and redemptions may be
permitted in certain circumstances.
• Prohibited Loans – L-QIAIFs may not originate
loans to any of the following: (a) natural persons; (b)
the AIFM, management company, general partner,
depositary, or to delegates or group companies of
these; (c) other collective investment undertakings;
(d) financial institutions or related companies of
these, except in the case where there is a bone
fide treasury management purpose which is
ancillary to the primary objective of the L-QIAIF; or
(e) persons intending to invest in equities or other
traded investments or commodities.
• Diversification – L-QIAIFs must apply a risk
diversification strategy to achieve a diversified
portfolio of loans and limit exposure to any one
issuer or group to 25% of net assets within a
specified period of time.
• Leverage – L-QIAIFs must not have gross assets of
more than 200% of net asset value.
• Stress Testing – L-QIAIFs must have a
comprehensive stress testing programme in place,
which identifies possible future economic changes
that could have an unfavourable effect on the
L-QIAIF’s credit exposure and which assesses the
ability of the fund to withstand such events.
• Credit Assessment, Granting and Monitoring
Processes – L-QIAIFs must establish and
implement appropriate, documented and regularly
updated procedures, policies and processes in
the following key areas: a risk appetite statement;
assessment, pricing and granting of credit; credit
monitoring, renewal and refinancing; collateral
management; concentration risk management;
valuation, including collateral valuation and
impairment; credit monitoring; identification of
problem debt management; forbearance, delegation
of authority; and documentation and security.
• Disclosure Obligations – L-QIAIFs must adhere to
additional disclosure obligations in the prospectus,
financial statements and /or sales marketing
materials, in relation to credit assessment and
monitoring processes, supplementary risk warnings
and information on the L-QIAIF’s risk and reward
profile and anticipated concentration levels.
www.globalfundmedia.com | 11IRELAND GFM Special Report May 2018
PINSENT MASONS
in Ireland, the settled and transparent
requirements applicable to L-QIAIFs and the
fast track authorisation process have already
attracted increasing interest in L-QIAIFs
among asset managers. In addition, the
availability of the AIFMD marketing passport
and proposed changes to the ILP structure
further enhances the attractiveness of
L-QIAIFs to managers looking to raise capital
in Europe, particularly with Brexit on the
horizon.
While the recent changes are a
welcome development, Pinsent Masons
and Irish Funds will continue to engage
with the Central Bank to make even more
enhancements to the L-QIAIF regime,
including more flexible leverage and liquidity
provisions, however, the new changes
most significantly have removed what was
generally viewed as the largest obstacle to
the growth of L-QIAIFs in Ireland. n
Gayle Bowen is the head of Pinsent Masons
Asset Management and Investment Funds
practice in Ireland. Gayle has extensive
experience advising asset managers on
licensing options, the establishment of
Irish regulated UCITS & AIFMD compliant
alternative products and in relation to the
global distribution and marketing of Irish
funds. Gayle also has particular expertise in
relation to cross border mergers. Gayle is a
member of the Irish Funds Brexit Steering
Group and is the outgoing Chair of the
Irish Funds Legal & Regulatory Committee,
which liaises with the Central Bank, the
Irish Government and European bodies to
represent the interests of the Irish funds
industry. Gayle has received ratings as a
leading lawyer from Chambers, Legal 500
and IFLR.
Aongus McCarthy is an associate in
Pinsent Masons’ Asset Management and
Investment Funds practice in Ireland. Aongus
advises primarily in the area of investment
funds and has advised on a wide range of
legal and regulatory matters. Aongus has
particular experience in the structuring,
establishment and operation of all types
of investment funds including UCITS and
alternative investment funds as well as
the establishment and operation of UCITS
management companies and alternative
investment fund managers (AIFM).
structures, which includes permitting the
creation of umbrella partnership structures
with segregated liability, which is currently
not permitted within Irish partnership
structures.
The purpose of the ILP Bill is to ensure
that there are viable limited partnership
structures in Ireland for asset managers
to consider when structuring their fund
products; in particular, for L-QIAIFs, private
equity and venture capital funds, as well as
infrastructure funds. To date, many asset
managers have domiciled such products
within their fund ranges in other European
jurisdictions given the absence of an
appropriate Irish structure.
It is envisaged that the proposed changes
will become law in Ireland during the course
of 2018.
What might the future hold for the
L-QIAIF?
Notwithstanding the fact that Ireland was
the first European member state to establish
a domestic framework for loan originating
funds, due to the initially conservative
approach adopted by the Central Bank,
there has to date been a low uptake in this
product in Ireland.
However, the new rules combined with
the strong legal and regulatory environment
IRELAND GFM Special Report May 2018 www.globalfundmedia.com | 12
OVERVIEW
“In reality, in the mid-1990s, a regulated
Irish limited partnership structure was
probably a bit too niche. At the time, as a
domicile, Ireland was best known for UCITS
and hedge funds. Ireland also had other fund
legal structures that were achieving more
or less the same results under US tax rules
and that were also being used by UCITS and
hedge funds. So, the ILP wasn’t featuring
that much.
“The ILP legislation didn’t get updated for
some years as a result and now it is being
generally refreshed,” remarks O’Connor.
There’s no doubt that when the National
Private Placement Rules are phased out in
Europe, which should have been this year
but will need to be extended because of
Brexit, private equity managers with non-EU
based funds who wish to access European
capital will find the amended Irish Investment
Limited Partnership a useful legal structure
to consider.
One only has to look at the success
of Luxembourg, whose Special Limited
Partnership was introduced only a few
years ago. If Ireland can compete on a
more equal footing by having the new ILP
structure in place, we expect that PE/RE
managers could favour the English speaking
jurisdiction and the speed to market of the
Irish regulated product.
“At the moment, while not an ideal route,
PE and RE Managers can still access
capital in Germany, the UK, the Nordics
and the Netherlands via the national private
placement regimes. We therefore need the
amended Irish ILP in place before those
NPPR channels are shut down. That’s when
I expect to see a lot of traction in these
sectors,” suggests Bowen.
Alongside the growth in PE/RE funds,
Ireland is also enjoying strong interest
• provide for carried interest and waterfall
mechanisms (which wasn’t in place
before);
• have unlimited amounts of borrowing or
leverage;
• have either open-ended or closed ended
structures;
• provide for partly paid shares, capital
commitments and drawdown provisions;
• invest through wholly owned subsidiaries;
• provide for flexible valuation provisions
which permit the Irish Venture Capital
Association.
“These changes, together with the
introduction of the ICAV structure, have
sparked a lot of interest among PE houses
looking for solutions to increasing their capital
base and distribution network in Europe.
This is evidenced by the number of QIAIFs
established by PE and RE houseswhich
include some rather well-known firms such as
LGT, KKR, Old Mutual, Kennedy Wilson and
Blackstone,” outlines O’Brien.
Investment Limited Partnership 2.0
Current amendments to the Irish Investment
Limited Partnership – Investment Limited
Partnership (Amendment) Bill, 2017 (the “ILP
Bill”) – are a key legislative development for
Ireland. They are a necessary update in the
eyes of many Irish fund practitioners, given
that the original Limited Partnership Act in
Ireland dates back to 1907.
On 18th July 2017, the Minister for
Finance announced that the Government
had approved the legal drafting of the
amendment to the ILP legislation and the
Heads of Bill (Heads) was published in early
March 2018.
“The goal of the ILP Bill will be to update
and modernise the current investment limited
partnership legislation, further enhancing
Ireland’s suite of legal structures available
for fund formation, and in particular Ireland’s
offering for global private equity, venture
capital, infrastructure, loan origination and
other asset-focused investment funds,”
explains O’Brien.
The original Irish ILP was designed to be
attractive to US managers at the time. The
idea was that by being tax transparent, it
would be favoured by US taxable investors
to whom managers were selling their
offshore funds.
7
15
“The ICAV is definitely the
default legal structure for
regulated funds in Ireland at
the moment. Over 450 have
been established since the
ICAV legislation was enacted
in March 2015.”
Donnacha O’Connor, Dillon Eustace
www.globalfundmedia.com | 14IRELAND GFM Special Report May 2018
HEDGEFACTS
user will have pre-set levels of authority
to access different parts of the system on
a ‘need to know’ basis. A risk officer, for
example, will only have access to risk-related
information and reports. They won’t have
any access to the core accounting system,
where they could potentially book trades.
“Using an audit trail we can monitor what
access any user has made over a period of
time,” says Hynes. “We can also set up the
system so that people can only log in from
specific locations or devices.
“We monitor the traffic that comes in to
look for anything that deviates from those
approved locations or devices.”
Having a platform like HedgeFacts
monitor access controls in a night watchman
capacity, can go a long way to reassure both
managers and their end investors.
Hynes confirms he is seeing a significant
increase in fund managers wanting to
ensure that all of the internal reports
and analyses they use for managing the
book are produced on a systematic and
automatic basis.
“We’ve worked over the past 12 months
to automate the production of all of that
information and reporting analysis.
“We aren’t an outsourced compliance
officer but one of the things we do for
Irish-based managers is to produce the
information they require to submit for
regulatory purposes. We can reduce the
workload that goes into becoming regulatory
compliant,” explains Hynes.
To illustrate the point, Hynes refers to one
particular client who was able to reduce their
middle- and back-office team by 60 per cent.
“That’s where you see the benefit of
utilising an intelligent system that works
in tandem with skilled staff,” Hynes
concludes. n
Although most institutional investors are
comfortable with the idea of fund managers
outsourcing middle- and back-office functions
while they focus on managing the investment
strategy, they are taking great care and
attention at the pre-allocation stage, as part
of the ODD process.
Whilst they understand that there are
numerous cost benefits and efficiencies to
be gained using hosted platforms, they want
complete confidence in who the platform
provider is.
John Hynes is CEO of HedgeFacts, a
leading provider of middle- and back-office
solutions to alternative fund managers.
He notes that the cloud has become a
significant game changer for managers
as they seek to use hosted platforms
to support their business activities, with
disaster recovery of particular import; indeed,
investors want to see real evidence of how
managers put their DR plans into practice.
“There are a host of reasons that might
prevent a manager getting to the office
and if they are tied to being in a physical
location to do business, that’s a limiting
factor. Sometimes it could be as simple as a
change in the weather; take parts of the East
Coast that suffered intense winter storms
recently. People don’t – and perhaps can’t –
travel to work in those conditions.
“In that case, people need the flexibility to
work from wherever necessary to manage
the portfolio. However, the challenge to that
is you still need the appropriate level of
controls in place to monitor and manage
how people are accessing systems in the
network. A lot of time and effort goes in to
monitoring those key requirements for our
clients,” explains Hynes.
HedgeFacts can be set up with a
hierarchy of controls whereby an individual
Reducing the middle-
and back-office burden
Interview with John Hynes
John Hynes, CEO at HedgeFacts
IRELAND GFM Special Report May 2018 www.globalfundmedia.com | 15
OVERVIEW
among managers – especially US-based
managers – wishing to set up AIFMD-
compliant loan origination funds; or L-QIAIFs.
These are very flexible and very quick
to set up, thanks to a 24-hour fast track
authorisation process.
As the L-QIAIF is fully regulated by the
CBI, a fund manager can benefit from the
AIFMD passport to market their fund across
the EU to professional investors.
“If you are a US manager, you can try
going through a Cayman fund structure but
you won’t be able to sell that freely across
Europe, and you won’t be able to sell it to
pension funds and insurance companies
because they usually require a regulated
version of any such product,” explains Bowen.
“When it was first introduced, managers
could only engage in loan origination
activities. That meant that they couldn’t also
invest in equities or other debt instruments
with a view to participating in the potential
upside. The only way around this was to
set a second sub-fund. The problem with
this is that they ended up with quite a
costly product, as costs, particularly annual
minimums are applied on a sub-fund basis.
“Now, managers can hold loan
participation debt and other credit strategies
not only as collateral but also to avail of the
potential upside. These changes will, in my
view, greatly increase the uptake in L-QIAIFs
by managers.”
Brexit and the rise of the Irish ManCo
UK managers must now come up with
contingency plans to ensure they can
continue to operate their funds and passport
them into Europe under the auspices of
AIFMD. Come 2019, UK managers will
become de facto third country managers,
even if they are operating as an FCA-
authorised UK AIFM.
“The top-tier institutional managers picked
up on the distribution issue straight away
following the referendum,” says Patrick
Robinson, Director, Bridge Consulting, which
offers a range of regulatory compliance and
governance services and operates its own
Irish ManCo, Bridge Fund Management
Limited (‘BFML’).
“A number of firms were receiving a lot of
questions from their institutional investors on
what these plans might be. As a result, one
or two took the decision quickly to set up a
‘contingency’ ManCo in an EU jurisdiction
like Ireland with a view to wait and see how
Brexit works out and whether they would
need to use the ManCo or shut it down. By
the end of Q1 2017, the next tier of asset
managers started considering their plans.
“Some are looking to set up their own
license in the EU and extend their regulatory
footprint, particularly where they have greater
numbers in their own sales team and
selling funds to wider range of investors in
a larger number of jurisdictions. Managers
who are selling into a lower number of EU
jurisdictions to a lower number of institutional
investors, will look to see whether they can
leverage a third party ManCo license and
whether that is a feasible model for them.
“We haven’t yet seen many managers
actually pull the trigger. With a UK exit date
of March 2019 and no guaranteed transition
process in place, we may see a greater
number of applications going in to the CBI
towards the end of the summer.”
In terms of the delegation of portfolio
management, Robinson points out that
ESMA appears to have softened its stance
and he doesn’t expect any real issues with
the continuation of discretionary portfolio
management on a delegated basis.
As he points out, this is already
happening in Ireland with respect to
managers in the US and Asia. “UK managers
are, however, currently having to consider:
How does my distribution work and is it
12
19
*Bridge Fund Management Limited is regulated by the Central Bank of Ireland.
At Bridge Consulting we pride ourselves on how we innovate with clients. Servicing 100+ asset management clients
from Europe, North America and Asia, we oer a full range of customised fund solutions:
- An EU domiciled 3rd Party Super Management Company (“BFML” ) for UCITS or AIFs (“Alternative
Investment Funds”)
- Customisable Support Services for Proprietary Management Companies
- UCITS / AIF Platforms
- Designated Persons Service - Regulatory Compliance, Risk Monitoring & Fund Governance from Bridge’s
Our objective is to let you concentrate on Investment Management & Distribution. We take care of the rest.
For further details contact us at patrick.robinson@bridgeconsulting.ie or mark.crossan@bridgeconsulting.ie
www.bridgeconsulting.ie
INNOVATION COMES IN
DIFFERENT
SHAPES
AND
SIZES
BRIDGE
FUND MANAGEMENT
dedicated team of industry professionals.
Advert 2018.pdf 1 23/03/2018 13:22
www.globalfundmedia.com | 17IRELAND GFM Special Report May 2018
Changing times in
Irish funds
By Mark Crossan
Irish Funds are on the move again. Every
couple of years there is a new product
evolution. In 2015 we had the introduction of
the ICAV (Irish Collective Asset Management
Vehicle) and 2018 is shaping up to be no
different. Not only could this year be the
year that Ireland gets its eagerly awaited
revamped Investment Limited Partnership
(ILP) structure, but it looks like other changes
are afoot as well.
In years gone by, the majority of new
funds travelled down the self-managed fund
route. This was the de facto standard fund
structure in Ireland. However, a new trend
has evolved in Ireland over the last 2-3 years,
with more and more asset managers electing
to use either a Management Company or a
Fund Platform when setting up new funds.
So why the change and what are the
drivers behind these new trends? In order
to analyse this in more detail, let us take a
closer look at the fund structures available;
1. Self-Managed Investment Company
(SMIC)
Of the 6,800+ funds domiciled in Ireland
this is still the most common fund structure
in the Irish market, mainly because of
its historical usage. Whilst Management
Companies and Platforms may have taken
over as the “new norm” from 2015, the bulk
of existing funds came from the previous era
of self-managed investments companies. A
SMIC can be set up as one of the following:
• A Public Limited Company (“plc”) under
the Companies Act or
• as an ICAV under the ICAV Act 2015.
Both structures utilise a Board of Directors
who are ultimately responsible for the
running of the fund. In this case, the level of
involvement for the asset manager in running
the fund would generally be considered
“medium to high”, as the increased regulatory
‘drag’ which comes with running a fund is
generally pushed back on the asset manager.
2. The Independent Third Party
Management Company
When the fund appoints an independent
third party management company the asset
manager is effectively outsourcing all of
the day to day running, operations and
oversight for the fund. Discretionary portfolio
management is generally delegated back to
the asset manager. The management company
becomes the responsible party in the eyes
of the Central Bank and the fund’s Board of
Directors now monitors the activities of the
Management Company. The fund Board still
maintains overall control. They can select their
preferred delegates and they retain the power
to hire or fire the Management Company as
deemed necessary. The fund retains its own
branding. The level of involvement for the
asset manager is “low”.
3. Fund Platforms
A fund platform comes as a pre-branded
package. This is a “plug and play” solution for
an asset manager, with fund delegates already
selected e.g. administrator / depositary. Time
to market should be short e.g. 4 to 8 weeks.
The control rests with the platform and they
effectively drive the business relationship. The
platform should act as a one stop shop for
the asset manager. The level of involvement
for the asset manager should be “low”.
As we can see, the three structures offer
different levels of involvement for the asset
manager. The structure selected should
reflect how involved the asset manager
wants to be. Other factors can also influence
this decision, so it’s best to also consider
the market environment and some of the key
business drivers that have been impacting
companies over the last 2 to 3 years.
Mark Crossan, Senior
Consultant at Bridge
Consulting
BRIDGE CONSULTING
www.globalfundmedia.com | 18IRELAND GFM Special Report May 2018
are contemplating setting up proprietary
Management Companies that will allow
their sales force to continue to market
funds under their own brand. As a
Management Company licence can take
between 6 to 9 months to establish in
Ireland, a number of firms are opting to
start the authorisation process in mid-
2018 in order to be ready for BREXIT in
March 2019.
• For smaller firms there may be greater
interest in third party Management
Company options as the cost of
establishing a management company,
implementing the required technology,
relocating staff (if required) plus the
ongoing cost of regulatory capital can
act as disincentives. Leveraging an
established third party Management
Company should reduce the authorisation
time frame.
• We are also seeing a shift within existing
self-managed funds where some fund
Boards are moving from Designated
Directors to Designated Persons due
to CP86.
Conclusion
When we consider all of these factors
together i.e. the structures available to
managers, the burden of new regulation
and the emphasis on best practice in
fund governance, regulatory compliance
and organisational effectiveness, we start
to understand why asset managers are
choosing a different path to that of old.
Management companies and platforms
are offering off-the-shelf solutions to a
number of current challenges. These
challenges are distracting managers from
what is becoming an increasing competitive,
fee conscious market. We are now at a
junction familiar to other markets and we
appear to be leaving the self-managed
road and travelling down the Management
Company / Fund Platform route.
From the Central Bank’s perspective,
might this be considered a positive
evolution?
Ireland will have enhanced its fund
governance model, however, potentially
reducing the number of fund entities it will
be required to regulate. We will have to wait
and see. n
Drivers to Change:
CP86: This was a three-year consultation
process run by the Central Bank of Ireland
and it addresses the substance requirements
of Irish regulated funds. It culminated in
the publication of “Fund Management
Companies – Guidance” in December 2016.
In this document, the Central Bank outlines
its findings and expectations for effective
management and oversight required by Irish
fund management companies. It outlines its
expectations for the role of the Board and
similarly for Designated Persons who can be
appointed by the Board to carry out day-to-
day oversight of the six specific management
functions that apply to both UCITS and AIFs
i.e. Investment Management, Fund Risk
Management, Operational Risk Management,
Regulatory Compliance, Distribution, and
Capital & Financial Management.
The rules became effective for all new
Fund Management Companies from 1 July
2017 and from 1 July 2018 for existing fund
companies.
BREXIT: The UK’s scheduled exit from the
EU is forcing UK asset managers to examine
their current fund structure and reassess
whether BREXIT affects their sales strategy
in Europe and how they can market their
funds. This can directly affect not only UK
AIFMs, but it also has the potential to affect
a UK-domiciled MiFID subsidiary firm that
was established by a global asset manager.
If the UK MiFID subsidiary loses its MiFID
distribution passport because it is no longer
located in the EU, then it too needs to
reassess the potential impact.
CP86 is currently generating a number of
changes in the Irish market:
• A growing number of asset managers
establishing new funds in Ireland only
want to focus on core functions such
as investment management and /or
sales and distribution, and are happy
to outsource fund governance and
compliance.
• As the costs of regulatory burden continue
to grow, asset managers are looking to
generate cost efficiencies where possible
from companies that already have the
relevant technology and regulatory
solutions in place.
• In the case of larger firms, a number
BRIDGE CONSULTING
IRELAND GFM Special Report May 2018 www.globalfundmedia.com | 19
OVERVIEW
reliant on a UK license being passported
elsewhere in Europe?
“As a result of Brexit, there is likely to
be a move towards the use of proprietary
or third party AIFMs,” adds Mark Crossan,
Senior Consultant, Bridge Consulting.
Fox confirms there has been an increase
in the number of third party management
companies and platforms setting up in
Ireland over the last 12 months, in part, no
doubt, to Brexit.
“Some have stated that part of the reason
for setting up is they anticipate providing
solutions to UK-based AIFMs who will be
regarded as third country managers from
March 2019 onwards.
“Through conversations we have with
asset managers, many are thinking about
what to put in place as a contingency plan
for Brexit. Do I need to have additional
structures or authorisations to cover current
or planned activity in the EU? Unfortunately,
nobody yet knows what the future
relationship is going to be between the UK
and the EU and uncertainty is never a good
situation in which to be making business
decisions,” comments Fox.
For those launching funds in Ireland to
enjoy passporting rights, most choose to
set up standalone funds rather than set up
sub-funds on platforms. This is because they
want it to “look and smell” like their product,
says Bowen. If a manager were to go onto
someone else’s platform, they could keep
their name on the fund but they won’t get to
control the board of directors.
Bowen explains that post AIFMD a lot
of US managers established management
companies in the UK but now face the
realisation that they may not be able to use
these for distribution in Europe except by
using the various national private placement
regimes (to the extent that they still exist)
once the terms of Brexit have been finalised
and are looking to Ireland as a solution.
“Most of our discussions with US and
UK based managers are around distribution
– how can they continue to market into
the EU?
“Ireland is well placed to benefit from
this. It is an English speaking common law
country. It is worth noting that the clients I
am speaking with are not looking to move
everything over from the UK to Ireland.
While they are happy to have substance
on the ground in Ireland, they are not
looking to relocate the day-to-day portfolio
management, which will continue to be
delegated back to the UK, which is where
that expertise lies,” says Bowen.
Under CP86, oversight and responsibility
of the fund manager has to happen out of
Ireland in the eyes of the CBI. The day-to-
day portfolio management activities can be
performed elsewhere, as Robinson alludes
to above, but the Irish AIFM will have to
show that they are properly supervising any
delegated activity.
O’Brien says he does not see a huge
imposition on UK based managers in
the short to medium term and rather “a
continuation of the status quo”.
The prevailing model is Irish regulated
products being marketed in the EU with the
correct management company structures in
place if delegation continues to be possible.
“We see current clients choosing either
Ireland, Luxembourg or Malta as viable
options; maybe first to use a hosted AIFM
solution before deciding whether to set up
their own AIFM,” says O’Brien. “In Ireland,
there are firms that are ‘Super ManCos’
and have wide European footprints. We see
a lot of managers looking to this hosted
regulatory solution in both Ireland and
Luxembourg. Everyone is hoping that the
15
23
Need trusted
expertise and
world-class fund
servicing solutions?
We can help.
With deep technical expertise, digital innovation and strong regulatory
credentials Link Asset Services offers:
• A specialist fund support and management company (ManCo)
service for UCITS and AIF funds
• A full transfer agency and fund accounting offering for funds
domiciled in Ireland, the UK, the Channel Islands, the Cayman
Islands and BVI
• A UCITS multi-manager platform to accommodate smaller
and start-up fund managers that can benet from a lower-cost
operating structure
For more information please contact keith.parker@linkgroup.ie
linkassetservices.com
0231 – 090418
Link Asset Services is a trading name of following companies: Link Financial Investments Limited, Link Fund Solutions Limited and Link Fund
Administrators Limited, which are authorised and regulated by the Financial Conduct Authority. Link Fund Administrators (Ireland) Limited and Link Fund
Manager Solutions (Ireland) Limited which are regulated by the Central Bank of Ireland, and Link Alternative Fund Administrators Limited.
For further information, visit www.linkassetservices.com/legal-regulatory-status/regulatory-status
www.globalfundmedia.com | 21IRELAND GFM Special Report May 2018
The Irish funds industry had another bumper
year with total assets for 2017 growing by
EUR298 billion – a 16 per cent year-on-year
increase – to a record high of EUR2.4 trillion
1
,
a substantial figure and testament to the
attractiveness of Ireland as a global funds
domicile. Of this total just over 76 per cent
represents UCITS funds’ assets, the balance
representing alternative assets. More than
900 fund managers from 50-plus countries
have assets serviced in Ireland.
2
There are many service providers
that form part of the Irish funds industry;
these include custodians, administrators,
depositories and investment managers.
A key participant in the Industry is the
Management Company, typically referred to
as the ManCo.
Fund management companies are defined
as either a UCITS management company,
an authorised Alternative Investment Fund
Manager (AIFM), a self-managed UCITS
investment company or an internally
managed AIF. Legislation also provides for
a dual-authorised AIFM/UCITS ManCo,
otherwise known as a ‘Super ManCo’.
Link Asset Service’s Management
Company is an example of this type of
structure and is Ireland’s longest-established
3rd-party ManCo.
This structure is particularly attractive
as it opens up additional opportunities
for a single legal entity with a single
governance structure and with a single
capital adequacy requirement to manage
UCITS and AIFs across multiple jurisdictions.
Capital adequacy is an especially important
consideration as ManCos not only need to
be capitalised but also need to ensure that
they maintain a sufficient buffer in order to
accommodate any increases in asset under
management.
A ManCo can be defined in a number
of different ways but essentially it exists
to assist fund boards with regulatory and
operational challenges associated with
underlying investment funds. At its core a
ManCo is all about governance; the prudent
management of the fund to safeguard and
maximise shareholders’ interests.
With effect from 1st July 2018 the fund
governance regime for Irish authorised
ManCos (including self-managed funds) is
to be overhauled. Since 2014, the Central
Bank of Ireland (CBI) has been engaged in
a body of work to examine and enhance
fund management company effectiveness
(CP86). The result is the Management
Company Guidance, a new governance
regime predicated on three core principles;
governance, compliance and effective
supervision.
Central to this new regime is the notion of
a Designated Person.
The CBI has distilled the entire fund
governance spectrum into six clearly
delineated managerial functions. These
six key managerial functions (regulatory
compliance, operational risk management,
capital and financial management, fund
risk management, investment management
and distribution) are required to be carried
out by a Designated Person; an individual
that demonstrates the appropriate levels of
knowledge and experience to manage and
oversee their respective functions.
All Designated Persons will need CBI
approval to act in such a capacity. It will
be possible for a Designated Person to
oversee more than one managerial function,
and the same Designated Person may
carry out the managerial functions of fund
risk management and operational risk
management. However, under this scenario
Fund governance
changes loom large
By Keith Parker
Keith Parker, Head of Business
Development at Link Asset
Services
LINK ASSET SERVICES
www.globalfundmedia.com | 22IRELAND GFM Special Report May 2018
LINK ASSET SERVICES
be made available on an ‘immediate’ basis
to the CBI. ManCos will also need to set up
and monitor a dedicated e-mail address for
communications with the CBI.
These varied requirements under the
Guidance demonstrate to how seriously
the CBI takes fund governance. These
enhanced rules bolster Ireland’s already-
impressive governance regime and further
reduces the likelihood of investment funds
failing. Importantly, the new guidance
was constructed on a consultative basis
and therefore the outcome represents
an industry-wide desire for supervisory
enhancement.
At Link Asset Services we share the
CBI’s vision and efforts to fortify the fund
governance regime. As a leading service
provider in Ireland’s fund industry we
have long championed the idea of a fund
governance regime that operates under
strict, implementable and achievable rules
resulting in a governance methodology
that maximises a positive outcome for all
participants. CP86 will go a long way to
sustain Ireland’s enviable reputation as
one of the world’s premier investment fund
domiciles. n
Footnotes:
1. https://www.irishfunds.ie/facts-figures/irish-domiciled-
funds
2. https://www.irishfunds.ie/getting-started-in-ireland/why-
ireland
the Designated Person who performs at least
one of these risk management functions
man not also perform the investment
management function.
CP86 goes much further than just
Designated Persons however. The CBI
has also introduced a new ‘Location
Rule’ which applies to fund directors and
Designated Persons. The determining factor
is the Bank’s Probability Risk and Impact
System (PRISM) rating of each individual
management company.
The rating will be such that a ManCo
will either be rated ‘Medium Low or above’
or ‘Low’. In the case of the former, the
requirement will be for three of the fund’s
directors to be resident in the state or at
least two directors to be resident in the state
and the same for one of the Designated
Persons. Additionally, half of the fund’s
directors will need to be resident in the EEA
and finally half of the fund’s managerial
function to be performed by at least two
Designated Persons resident in the EEA. It is
obvious from these requirements that impact
on UK fund managers post-Brexit will be
considerable.
The Guidance also extends in to the realm
of fund record keeping and the retrievability of
these records to ensure extensive records are
kept (board minutes, policies and procedures,
letters of engagement, etc) and for them to
IRELAND GFM Special Report May 2018 www.globalfundmedia.com | 23
OVERVIEW
and take away the regulatory burden so that
those investment managers can get back to
focusing just on managing the portfolio and
raising capital.
“We have the infrastructure commensurate
with what a third party ManCo needs to
deliver in today’s regulatory environment.
“In addition, over the next couple of years
we will look at how we can best to use our
ManCo services as a form of outsourcing
to support managers who decide to set up
their own ManCo in Ireland. We will be able
to help people arrive at the most effective
operating model using a mix of our people
and their people; what that model looks
like, however, will depend on the nature and
scale of what they are doing,” concludes
Robinson. n
status quo will remain. I don’t think it would
be in the investors’ interests if there is no
political agreement on delegation back to
FCA regulated fund managers. We know
it’s already available to US managers and
believe it should be made available to UK
fund managers.”
Currently, there are a large number of self-
managed investment companies (‘SMICs’)
in Ireland that need assistance with respect
to substance in the form of governance and
compliance. This needs to be in place by
June this year in order to comply with the
CP86 obligation deadline.
Although there’s no rush for SMICs to
appoint an AIFM or establish a proprietary
AIFM, managers who are setting up new
funds must choose either option, in order to
continue to operate freely under AIFMD.
Robinson says that third party ManCos
in Ireland are developing quickly in terms of
service standards, in terms of technology,
compared to the pre-AIFMD era, when
traditionally third party ManCo services
were sold on a lighter basis given that most
investment managers used the self-managed
fund model.
“Now, with CP86, managers are looking
for a third party ManCo service which can
take on the day-to-day operations of a fund
19
“Now, with CP86, managers
are looking for a third
party ManCo service which
can take on the day-to-day
operations of a fund and
take away the regulatory
burden.”
Patrick Robinson, Bridge Consulting
