As private equity firms race to set up in a jurisdiction outside the UK ahead of the country’s secession from the European Union, Ireland is increasingly being viewed as an alternative fund domicile to Luxembourg.
One CFO at a general partnership who spoke at Invest Europe’s CFO Forum in Lisbon in June said Luxembourg shouldn’t be the sole destination for PE firms that want to be in line with the Alternative Investment Fund Managers Directive, and he suggested Ireland for its skilled workforce.
The number of jobs in Ireland’s financial services sector has been rising over the past several years, and dozens of fund administrators have set up shop there to rival Luxembourg’s. This has been fueled in part by the rising demand of alternative investors to establish a presence in the country.
A non-Irish private equity fund that wants to be domiciled in Ireland must apply to become a Qualifying Investor Alternative Investment Fund.
The Central Bank of Ireland has an online system called ORION (which stands for Online Regulatory Information System for Authorizations) which can process approval of an application in as short as 24 hours as long as all service providers to the QIAIF have been approved by the central bank.
That quick approval process gives Ireland an edge over Luxembourg, which has an average three weeks, depending on the structure, according to PwC.
The number of QIAIFs — which includes hedge funds and funds of funds — totaled 2,308 as of May, more than double the amount a decade ago. QIAIF assets under management have also surged in the same time frame, by more than fourfold to €518 billion.
While Ireland and Luxembourg have about the same number of tax treaties with other nations, they don’t match the UK’s 138 treaties.
The UK’s secession from the EU is about eight months away, and Ireland is vigilantly monitoring events. Its Department of Foreign Affairs even has a webpage dedicated to Brexit to keep businesses informed about the UK’s impact on Ireland.
“GPs are definitely planning for Brexit,” said one general counsel at an advisory firm.