November 10, 2017 / 1:34 PM / in a year

LPC-Irish funds market to benefit from ‘regrettable’ Brexit

Nov 10 (Reuters) - Ireland is making it easier for alternative investment funds to operate in an attempt to take advantage of increased interest following the UK’s decision to leave the European Union.

Michael D’Arcy, Irish minister of state for financial services and insurance, said that Brexit was “regrettable” and affirmed the country’s commitment to the EU.

“Ireland will not leave the EU,” he told delegates at the Irish Funds annual UK Symposium in London on Friday.

With the increased uncertainty following the Brexit vote, direct lenders are considering their options once the UK leaves in order to continue to market funds to investors across the continent.

Nick Fenn, a founding partner of private debt investment firm Beechbrook Capital, a London headquartered firm that manages investments across Northern Europe, said the firm is planning to open an office in both Cork and Dublin.

“Our working assumption is that there will not be a satisfactory arrangement in April 2019 [between the UK and EU]. We’re looking to establish an AIFMD in Ireland, so we have a Brexit-proof solution for our investors,” he said.

In July, the government announced it is aiming to overhaul the 1994 Investment Limited Partnerships Act.

While the legislation is at early stages, there is hope it will open up closed-ended funds to be managed under more flexible structures, as well as further clarifications on capital call structures.

“It is sensible that in Ireland they’re having a fresh look at the existing legislation and putting together something that actually suits the needs of funds managers in 2017,” Fenn said.

Around €2.3trn is managed in funds domiciled in Ireland with approximately a quarter of the amount in alternatives, according to figures from the Central Bank of Ireland.

The country is the second most popular jurisdiction for funds management globally, behind both the US and the UK.

The private debt market in Ireland continues to increase in size as funds capitalise on the difficulty of middle market companies to obtain credit from traditional banks.

According to Deloitte, 91 deals have been closed by direct lenders in the Irish market since 2011 by 18 different funds.

Large private debt funds such as BlueBay and Ares have closed deals in the region, while Dunport Capital, a spin out from BlueBay, recently announced it will launch a €300m fund to provide debt financing to small and medium-sized industries across Ireland. (Editing by Christopher Mangham)

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