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Irish funds reforms set to attract extra £18bn per annum

written by Bella Palmer
funds

The Government’s new ILP legislation overhauls the existing legislation to allow for the establishment of special investment partnerships

Changes to the rules governing how private funds are set up in Ireland will attract up to €20 billion (£18.05 billion) a year in global capital and create an additional 3,000 jobs, the funds industry has claimed.

The Government’s new Investment Limited Partnership (ILP) legislation, which passed into law just before Christmas, overhauls the existing legislation to allow for the establishment of special investment partnerships.

Ireland is the second-largest funds hub in Europe behind Luxembourg but, until now, has been unable to offer this particular type of fund structure, which is increasingly used by fund managers generally and increasingly used to finance green energy projects.

Even the State-owned Ireland Strategic Investment Fund (ISIF) has – in the absence of ILP-enabling legislation – been forced to use Luxembourg-domiciled vehicles to fund certain projects.

Based on Ireland’s existing market share of the European funds industry and the State’s attractiveness as an English-speaking, common law jurisdiction, Irish Funds, the umbrella group for the industry, estimates that the new legislation will attract up to €20 billion (£18.05 billion) per annum in global private capital.

And because these funds are more labour-intensive to operate, up to 3,000 fund management roles are expected to be created alongside the additional investment. There are 16,000 people employed in the funds industry.

When we first conceived of this legislation four years ago it was pre-Brexit, it was also pre the persistent low interest rate environment, it was pre the EU’s green deal and it was pre-Covid, the chief executive of Irish Funds, Pat Lardner, said.

These factors had led to an explosion in investment via private partnership structures and Ireland was now in an ideal position to capitalise, he said.

Over the past five years there has been 3,300 private equity funds launched in Europe, the vast majority private partnership structures.

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