Killian Buckley published an article “The Irish Funds Industry” Acquisitions Magazine on August 2011. The article examines the growth of the Investment Funds Industry in Ireland.
Despite the country’s current economic situation, Ireland is still well recognized as a world class center for the fund industry. Servicing domestic and non-domestic funds with assets under management of over $1trillion, the industry now employs over 8,000 people in locations beyond its Dublin base.
Ireland’s An Taoiseach Enda Kenny has spoken out that growth in the investment funds industry will underpin future growth against the economic challenges it faces and he argued that the country remains very much open for business. That said there are challenges ahead; Acquisition International speaks to Killian Buckley, in Kinetic Partners’ Dublin office, about the Irish funds industry.
Kinetic Partners was formed in March 2005 as a provider of professional services to the asset management, banking and broking industries. The award-winning firm has grown to over 115 people across five locations including London, Dublin, New York, the Cayman Islands and Geneva and has attained its reputation as the leading provider of services in these chosen markets. After six years in operation, the Dublin office continues to advise asset managers, service providers and investors on all aspects of the Irish funds industry.
When Irish funds are rising
Let’s get the bad news out of the way first. Yes, the domestic Irish economy is in bad shape. Yes, growth is looking shaky. Yes, we owe a lot of people a lot of money. However, amidst the domestic gloom, we have the shining star that is the Irish investment funds industry. Have a look at these stellar figures, enough to make any Irish Minister for Finance cry; for good reasons for once.
In 2010 Irish funds assets increased in size by 29% to €963 billion. Total assets of Qualifying Investor Funds (the de facto Irish hedge fund) grew by 35% to €153 billion. Ireland is the fastest growing of all the cross-border UCITS (the default international mutual fund model) domiciles, with 70 new investment managers launching 701 new funds and sub-funds in 2010. And, in case you didn’t realize, Ireland is the largest fund administration center in the world anyway, with 43% of global hedge funds and 63% of European hedge funds administered in Ireland.
This level of activity has kept Kinetic Partners busy. As a boutique provider of professional services to the asset management, banking and broking industries, we are helping global asset manager clients launch funds, assisting with compliance and tax work and also providing auditing services to funds and their managers.
There are many reasons that are worth looking at for this growth in Ireland. Firstly, Ireland has continued to ride the UCITS wave, with Irish UCITS funds distributed in over 70 countries globally. The reasons for the growth in UCITS have been well documented and Ireland does not buck the trend here. Kinetic Partners’ Irish office has seen a large number of new entrants to the UCITS market as clients. This ranges from traditional asset managers who are large players in their domestic markets but are looking to diversify their distribution network globally with a UCITS fund, to alternative asset managers looking to launch an onshore UCITS version of an offshore product. This is in addition to existing UCITS clients continuing to launch product off their platforms.
Furthermore, we see plenty of scope for Ireland to take advantage of some of the efficiencies that UCITS IV, a recent EU regulatory directive, may create, both as a domicile for funds and for management companies. Tax is a key consideration when it comes to UCITS IV consolidation, and with a 12.5% corporate tax rate, and no tax on funds, Ireland offers a compelling advantage.
Changes in Irish legislation have made it easier to re-domicile funds from other locations. These funds effectively “migrate” to Ireland by way of continuation, allowing managers to carry performance and track record with them. The process has been praised as simple and straightforward. This could act as a real marketing ploy for Ireland in the battle to become the alternative Investment Managers Directive (AIFMD) domicile of choice. AIFMD is another EU directive that looks to regulate the alternative investment fund managers doing business in Europe. Ireland is fortunate to have a readymade solution here in terms of its Qualifying Investor Fund product, which, it appears, will tick all the AIFMD requirements and make international distribution of products from Ireland to the world as easy as in any country.
All in all, the Irish funds industry is in rude health. Perhaps the strongest argument for doing business in Ireland though remains the original one; the skills, expertise and experience of those in the industry. Ireland may have taken a rollercoaster economic ride but fortunately the standards of service have remained as high as ever.