Ireland is positioning itself as the private equity domicile of choice in the European Union (EU). The COO Guide to Ireland spoke to Conor MacGuinness, a director at DMS Offshore Investment Services in Europe, about the opportunities that Ireland offers private equity firms.
COO: How easy is to launch a private equity fund in Ireland?
MacGuinness: As private equity funds are classified as alternative strategies falling under the Alternative Investment Fund Managers Directive (AIFMD) regime, there is a notification only process to the Irish regulator – the Central Bank of Ireland – and therefore it is a straightforward process in that regard. Ireland also has a very favourable tax environment, which certainly appeals to private equity shops. In addition, Ireland has a good supply of service providers catering to private equity, be it fund administrators, lawyers or auditors. These providers can support private equity funds during the launch phase and on an on-going basis.
COO: What competitive edge does Ireland have over traditional private equity centres such as Guernsey?
MacGuinness: As an EU member state, Ireland benefits from the marketing passport, which allows Irish funds - including private equity funds - to be marketed to investors across the EU. The Channel Islands, not being EU member-states, cannot avail themselves of this benefit. Ireland has a long history of supporting alternative managers and can therefore provide consolidated solutions for managers with a wide book of alternative business, be it private equity or hedge funds.
COO: How receptive are investors to an Ireland-domiciled private equity fund?
MacGuinness: Irish private equity funds currently attract investors from the US, Europe and internationally from the Middle East, Asia and elsewhere. This is built on the long history Ireland has as a global funds centre, serving both Irish funds and international funds for over 20 years.
COO: How is AIFMD impacting private equity funds domiciled in Ireland?
MacGuinness: AIFMD brings general partners (GPs) within the scope of AIFM governance and policy requirements. The AIFMD rules on asset-stripping are also relevant for private equity funds. AIFMD states that there can be no asset-stripping within 24 months of an AIF acquiring control of a non–listed company. The remuneration provisions on “identified” staff are also relevant for carried interest.
COO: What is the calibre of the service providers available to assist private equity funds in Ireland?
MacGuinness: Irish service providers – administrators, lawyers and auditors – have long serviced private equity funds structured in various domiciles globally, be it the Cayman Islands or Delaware. This has ensured a depth of expertise in the local industry, which allows a straightforward transition to supporting Irish-domiciled private equity funds. All of the top names in the service community have operations in Ireland, including the big four audit firms, large administrators such as Citco, State Street, SS&C GlobeOp and BNY Mellon, and the major law firms.