A THOROUGH UNDERSTANDING OF PRIVATE EQUITY

RETOUR SOMMAIRE

A CACEIS PRODUCT DEVELOPMENT PUBLICATION - 2010

MAIN ACTORS AND STRUCTURES

2.2.3

Ireland

Ireland is a jurisdiction that has become synonymous with alternative investments, includ- ing hedge funds and private equity funds. As a domicile for private equity funds, Ireland offers a variety of potential fund structures both regulated and unregulated: • Regulated vehicles include unit trusts, variable capital investment companies and com- mon contractual funds, each of which can be open-ended, limited liquidity or more fre- quently closed-ended schemes, with the level of investment and borrowing restrictions and permitted investment mechanics being set by the targeted investor profile – retail, professional or qualifying investor – with strict rules as to custody, asset management and fund administration. These private equity vehicles are referred to as non-UCITS structures. The Qualifying Investor Fund (QIF) is the non-UCITS vehicle most frequently used for pri- vate equity funds in Ireland, because of its flexibility; Indeed, the Financial Regulator’s usual conditions for borrowing, leverage and diversification of investments do not apply to the QIF, thereby enabling sophisticated investors to use this structure for a wide range of investment purposes. Furthermore, since February 2007, a QIF fund can be authorised by the Irish Financial Regulator within 24 hours of the submission of relevant documentation to the Financial Regulator 40 . The following graph displays the rapid growth of QIFs since 2002.

Figure 28 – Evolution of QIFs’ Net Asset Value and number of funds (2002-H1 2009)

1200

109,051

1000

93,999

92,669

89,933

800

67,337

600

43,548

400

Number of funds

27,864

18,124

200

0

2002

2003 2004 2005 2006 2007 2008 JUN-2009

Net Asset Value ( E Million)

Number of funds (including Sub-funds)

Source: IFIA (Irish Funds Industry Association), 2009

• Unregulated structures are generally housed within limited partnership structure estab- lished under the Limited Partnership Act, 1907. They are referred to as LPs. This structure provides maximum flexibility to promoters and investors with regard to the marketing of the fund, making of investments, ongoing governance, dissolution and return of capital on liquidation of the fund, as no licenses are required unless the fund is providing certain investment services.

40 Source: IFIA, “The Irish Qualifying Investor Fund (QIF)”, 2009

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