The private asset funds sector of the Irish funds industry is set for accelerated growth as the jurisdiction looks forward to capitalising on the solid groundwork put in place with the introduction of the ILP legislation in 2021.
“I expect it to be more of a snowball effect rather than a tsunami of new funds being launched,” explains James McEvoy, Country Executive Ireland, Alter Domus, “But it is definitely a story of growth across the industry and as a firm we are very focused on this.”
In the past year alone, Alter Domus has hired around 100 people in its Irish office, testament to the rapid rate of expansion in the jurisdiction. These developments have been a long time coming; in McEvoy’s view, Ireland was, “a bit behind the curve as a jurisdiction in enhancing some of the elements on offer like the ILP, which was somewhat frustrating. As a fund domicile, we were not so quick to complete some of the enhancements needed.”
However, he praises the measured and stable approach taken to the regime enhancements: “There’s a lot to be said for stability, especially as far as our clients are concerned. So although it may not have developed as quickly as we would have liked it to, our clients do appreciate stability.”
The ILP can be considered the ‘final piece of the puzzle’ which provides a suitable framework catering for private capital funds. This has also seen the broader funds eco-system in Ireland expanding further.
“Looking back a few years, we weren’t fully capitalising on the opportunity in the market,” comments McEvoy, “while now we’re seeing real development within the Irish industry across the key pillar services.”
He notes how the past year has been spent getting managers comfortable with the product and having a few solid test cases up and running: “As we come into year two following the introduction of the ILP, the market has moved past conversations about managers being first movers and now its about them joining a growing trend. We are starting to see certain private asset strategies coming to Ireland which before would not have considered our jurisdiction.”
Alter Domus itself launched its fund administration business in Ireland in 2016. Then last year began offering Alternative Investment Fund Manager (AIFM) and specialised depositary services. This makes the firm the largest provider in Ireland offering full-service solutions dedicated to private asset funds.
Evolving themes
The jurisdiction is also well-placed to benefit from the rising interest in sustainable investments. McEvoy outlines: “Its early days but its certainly a growth space and its important for Ireland to show itself at the forefront at the start. There has been some strong activity in sustainable strategies in the last 12 months.
“We’re clearly seeing a bit of a sea change in investor allocations towards sustainable investments. A number of new Irish fund launches over the last year have been pure-play sustainable investment strategies. So, it’s looking like it could become a leading theme which is exciting.”
The ILP itself is advantageous for this strategy; it’s a fully regulated product in a best-in-class jurisdiction. This way managers are guaranteed a high-quality governance framework which provides all the hallmarks of a typical private equity structure which will suit investors.
McEvoy also highlights development taking place in the credit space: “Ireland is no stranger to this sector and has been the choice jurisdiction in Europe for CLOs, for example. We have a long tradition of supporting managers in their structured finance and securitisation efforts.
“Global debt managers have really strong presence here and that is continuing to grow. We are also identifying progress on the real estate side. Traditionally, we predominantly saw domestic real estate strategies being launched. Now though, we’ve opened up the opportunity for that to evolve into more pan-European real estate strategies being domiciled in here in Ireland.”
Talent and appeal
A strong appetite for domiciling funds in Ireland can be seen among US managers. “North American managers, who might traditionally have had Ireland on their shortlist but typically would not have ended up locating their funds here for product reasons are now looking at Ireland more seriously,” underlines McEvoy, “The opportunity is broad and the US is the most significant and, maybe, obvious, source of growth.”
He observes similar discussions are also being had among managers in Asia who are looking for access to European investors: “There is a longer lead time on those developments but we are engaging in these conversations with clients across our Asia Pacific offices.”
Both US and Asian managers wishing to access European capital are required to familiarise themselves with the Alternative Investment Fund Managers Directive and the depth of the requirements it demands. However, they are well supported by service providers like Alter Domus who are highly experienced in leading and assisting clients from concept to launch and throughout the entire life cycle of the fund.
“As Ireland experiences this wave of growth and expansion, we also need to focus on making sure we remain attractive as an employer,” McEvoy points out, “It has been hugely encouraging to successfully attract strong talent here in Ireland. And it is important to continue to present a compelling proposition and provide professionals with real development opportunities; its not just about getting them in the door. These efforts also ultimately benefit our clients.”
James McEvoy, Country Executive Ireland, Alter Domus
James McEvoy joined Alter Domus in 2014 and is responsible for the overall management and development of Alter Domus in Ireland, overseeing significant growth of the Irish business which now has offices in Dublin and Cork, and over 280 professionals providing a full range of integrated fund, corporate and debt capital markets services, further expanding with depositary and AIFM solutions.
