Following a prolonged dialogue with industry participants, on 13 June 2019, the Irish Government approved the publication of the Investment Limited Partnerships (Amendment) Bill 2019 (the "Bill"), which is a positive step in the direction of making Ireland a more attractive domicile for private equity and venture capital funds.
The Irish funds industry
The funds industry has long been a major contributor to the Irish economy. According to Irish Funds, as of May 2019, assets in Irish domiciled funds reached €2.64 trillion with approximately 40% of the world's alternative investment funds administered in Ireland.
A recent report prepared by Indecon regarding the Economic
Impact of the Funds Industry on the Irish Economy revealed
that in 2018 alone, the funds sector in Ireland contributed nearly
€840 million in direct taxes to the Irish Exchequer. The
report noted that there are in excess of 16,000 people directly
employed within the funds industry with a total employment impact
(i.e. direct and indirect) of more than 32,000.
While the statistics paint a very positive picture, the reality is that Ireland has fallen behind its counterparts in relation to its offering to private equity stakeholders. While the ICAV has proven to be a very successful introduction to the Irish fund product offering, it has not captured the attention of private equity managers and investors, who are familiar with, and have always had a preference for, limited partnership structures. The absence of a 'fit-for-purpose' partnership vehicle is considered by many to be the biggest gap in Ireland's current financial services offering.
With dry powder at an all-time high and investor confidence in private equity funds appearing to show little sign of abating any time soon, there is a great deal of opportunity in the private equity and venture capital markets at present, which Ireland is well positioned to serve, particularly in light of the reform of Ireland's limited partnership legislation which is underway at present. Although an increasing number of managers have turned to Luxembourg as an EU domicile for their private equity and infrastructure funds in recent times, the reform of Ireland's limited partnership regime is likely to ensure that Ireland will be seen as a viable alternative going forward. Furthermore, with Brexit on the horizon, the introduction of these new measures is timely. Ireland will be the only English speaking EU Member State post-Brexit and with a large number of private equity funds established as partnerships in the UK, Brexit will continue to lead to affected managers looking for alternative options in relation to their choice of fund domiciles.
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