Ireland in prime position to maximise private markets investment potential
Private markets investing is an area with considerable growth potential.
'Private market investing is investing in privately owned companies and credit – so, companies that are not publicly traded on a stock exchange or portfolios of loans secured against real assets,' explains Ken Somerville, head of global fund services Ireland at US Bank.
'These types of investments are attractive because they may offer higher or more predictable returns compared to public markets due to the opportunity for significant growth and the value of real assets.'
As a primary EU jurisdiction for funds, alongside Luxembourg, in the Republic of Ireland the key mechanism available to the industry is the funds sector's facility to structure fund vehicle types, under the supervision of the Central Bank, that are suitable for investment into private assets.
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'Given the less liquid nature of private assets, matching the liquidity profile of those assets to the investor's entitlements is a critical path for success in attracting capital including from a broader range of investors,' says Somerville.
Ken Somerville, head of global fund services Ireland at US Bank
The Central Bank of Ireland enhanced the State's private assets funds offering in March 2025 via the publication of the updated Alternative Investment Fund Managers Directive (AIFMD) Q&A.
'The updated Q&A introduces a facility that enables alternative investment funds (AIFs) to guarantee third-party debts,' says Somerville. 'This, combined with some additional clarification regarding loan origination – issuance of new loans – substantially addresses the historic challenge of matching the liquidity profile of the investment assets to the investor's entitlements. These clarifications both cement and enhance the position of Ireland as a primary EU and global domicile for the private assets space.'
Maximising the sector's potential is important. 'Private markets are a fundamental component of the investment universe,' says Nicholas Blake-Knox, chair of Irish Funds.
Nicholas Blake-Knox, chair of Irish Funds
'Accordingly, it is critical that we have the product toolkit and capabilities here in Ireland that asset managers need to make these products available to their investors. It is no longer a nice to have or niche product offering.'
The advent of a new type of collective investment framework – ELTIFs, or European long-term investment funds – last year, which allow investors to put money into companies and projects that need long-term capital, was an important step.
More work is to be completed through the remainder of this year as we prepare for the transposition of AIFMD II, no later than April of 2026, Blake-Knox points out.
The Irish Government's support for the State's funds and asset management industry was clearly expressed in the publication of the Funds Sector 2030 report in October 2024.
'The reform of our domestic alternatives funds regime is high on the agenda and we are encouraged by the opportunities for Ireland that are presented in the upcoming AIF rule book consultation. In addition, if we are able to implement some targeted tax changes, particularly in relation to the introduction of a dividend withholding tax exemption for our investment limited partnership (ILP) vehicle, there are significant opportunities for expanding our private funds footprint,' says Blake-Knox.
Already growth in global private markets has more than doubled in recent years from US$9.7 trillion (€8.5 trillion) assets under management in 2012 to an estimated US$24.4 trillion (€21.5 trillion) at the end of 2023.
Assets under management in Irish domiciled funds hit €5 trillion at the end of 2024 and the Republic is widely expected to become the largest fund domicile in Europe in the next few years.
In terms of the Irish fund structure options, the Irish Collective Asset-management Vehicle, a corporate structure tailored specifically for investment funds, is one of the most popular structures for new funds in the State, including for private assets, say Jennifer Dobbyn and Oisin McClenaghan, funds partners at international law firm Ogier, and has proven popular with US managers as a go-to treaty-based fund structure.
'Following the introduction of the ILP (Amendment) Act 2020, the ILP is now also regarded as a key structure for alternative funds, facilitating greater investment in private assets. The appeal of the ILP has also been enhanced by the introduction of the participation exemption which has applied since January 1st, 2025, meaning that dividends payable to an Irish fund from a non-Irish subsidiary are exempt from any Irish corporation tax,' they add.
The revised ELTIF regulation and the harmonisation of loan origination rules through the transposition of AIFMD II are also helpful, they say.
'The 24-hour Central Bank authorisation process is also available to professional investor ELTIFs, which is unique to Europe,' Dobbyn and McClenaghan add.
Funds which are focused on private assets have more complex structures, says Philip Murphy, head of asset management tax at KPMG In Ireland.
Philip Murphy, head of asset management tax, KPMG Ireland
'In light of this, having a full suite of legal vehicles and a regulatory approach which is efficient, transparent and innovative is important, as fund promoters normally prefer a single domicile with the ability to launch a full suite of investment products from that jurisdiction,' he says.
In order to capitalise on expected growth, it is crucial that the State has a complete toolkit available to fund promoters.
'While there have been some positive steps in this regard, such as the changes to the Investment Limited Partnership framework and introduction of the ELTIF II regime in recent years, unfortunately Ireland is still at a competitive disadvantage to jurisdictions such as Luxembourg as a fund domicile for certain private asset classes,' he says.
'Luxembourg has seen a significant growth in private asset funds over the last number of years in the context of its RAIF offering, which is an indirectly regulated product – that is, while the fund vehicle is not itself regulated, the regulated status of its manager provides the requisite regulatory comfort to investors.'
This decreases cost and time to launch by avoiding a double layer of regulation.
'We do not have a similar indirectly regulated product offering in Ireland – changing this would likely be transformative for our already very successful funds industry as it could unlock Ireland as a jurisdiction for the full suite of private assets,' says Murphy.
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