Alternative options gain traction in Ireland
The continuing low rate environment and ongoing depressed yields in traditional asset classes represent significant challenges for investors. Institutional investors are no exception, and, as a result, are increasingly considering new avenues to achieve the returns they need to meet their liabilities.
A report published by Mckinsey & Co in 2014 estimated that three-quarters of investors expect to maintain or increase their investments in alternatives over the next three years. This trend is expected to create significant opportunities for alternative investment providers, and has been accompanied by a boon in new vehicles and structures which can provide the “hygiene factor” institutional investors need when moving into unchartered investment areas.
Ireland is already one of the principal domiciles for alternative investments in Europe and the landscape continues to evolve to remain attractive for private equity and real estate managers, driven by the variety of structures in place in the domicile to support them.
One of the latest is the Irish Collective Asset Management Vehicle Bill (ICAV), allowing a regulated fund to be set up as a corporate vehicle. The ICAV Act was signed into law on 4th March 2015, and AIFs looking to use the ICAV structure will be authorized by the Central Bank of Ireland (CBI).
The CBI is acting as registrar for all ICAVs, with applications available from their website from 10th March and accepted from 16th March. Both managers and service providers will keep a close watch on application levels over the first few months as ICAV is widely expected to become an attractive vehicle, especially for US-managed Collective Investment Schemes, due to the option for fund managers to elect classification under the US double taxation rules.