Industry Insights: Ireland's Private Credit Advantage

By Graham Roche, Director, Private Credit & Debt Solutions at IQ-EQ

Ireland is rapidly becoming a jurisdiction of choice for private credit managers seeking to establish direct lending structures in Europe. Ireland's adoption of AIFMD II's harmonised loan origination rules (without gold-plating), provides asset managers with a clear path to run scalable, efficient credit strategies from a jurisdiction they and their investors already know well.

Global private credit is on track to grow by US$2 trillion to US$4.5 trillion by 2030 (Prequin 2025 Global Report: Private Debt). Despite recent jitters in the U.S. wealth investor base, institutional demand for private credit remains strong, with an opportunity set supported by ongoing bank retrenchment and sponsors' continued need for flexible, relationship-driven capital. For European and U.S. asset managers, seeking to raise cross border capital, that growth presents a practical question: where should we domicile our next generation of direct lending funds?

With our global perspective at IQ-EQ, we're seeing a clear pattern emerge. An increasing number of private credit managers are choosing Ireland as the preferred home for their direct lending funds. While there are many reasons for this shift, the standardisation of European lending rules under AIFMD II has been a clear catalyst for change, underpinned by Ireland's mature fund ecosystem and deep credit expertise.

This article explores the shift toward Ireland as a preferred domicile for direct lending funds, and what it means for global private credit managers and their investors.

AIFMD II's harmonised loan origination rules have levelled the playing field

Following the implementation of AIFMD II EU Member States now have a harmonised framework for loan origination funds. In short this means that all new EU loan origination funds now operate under a common set of mandatory rules, Ireland and Luxembourg, Europe's two specialist fund domiciles, now operate on a level regulatory playing field, and fragmented national regimes are gradually being replaced by an EU-wide rulebook.

AIFMD II represents a particular turning point for Ireland, where local rules around loan origination were sometimes viewed as a "handbrake" on certain private credit strategies. AIFMD II is effectively releasing that brake, and Ireland has moved quickly.

The CBI have now published their updated AIF Rulebook with the old Loan Origination chapter removed per their Consultation Paper 162 and are authorising funds under the new AIFMD II regime, enhancing Ireland's attractiveness as a private asset friendly domicile.

Ireland's proactive stance gives managers a high degree of regulatory certainty, transparency and clarity, together with a clear pathway to developing direct lending structures in Ireland today.

10 reasons private credit managers are choosing Ireland

Beneath the headlines about AIFMD II, there are deeper structural reasons why Ireland is emerging as a natural home for European and global direct lending funds.

Ireland is a global centre for investment funds

Ireland is one of the world's largest and fastest-growing fund domiciles. It's the third largest domicile globally for investment funds, with US$6.5 trillion in AUM and US$8.4 trillion in AUA. Ireland is also home to 22% of all European fund assets. More than 430 financial services companies operate from Ireland, including 17 of the world's top 20 institutions. For private credit managers, this scale and depth signal a mature and sophisticated ecosystem for complex strategies, investors who are already comfortable with Irish vehicles, and a regulator familiar with alternative and private asset funds.

Deep credit expertise across products and structures

Ireland is not new to credit. US$196 billion of private credit funds were administered in Ireland in 2024 (according to Monterey data). US$1.5 trillion of assets (predominantly debt and debt instruments) are managed by Irish SPVs. Ireland is the domicile of choice for European CLO managers and a global leader in aviation finance, with over half of the world's commercial aircraft financed out of Ireland. As a result, the entire ecosystem understands leverage, credit risk, and the nuances of structured finance.

Harmonised loan origination rules and early adoption

With AIFMD II, credit managers can execute direct lending strategies across the EU under a common regulatory framework. Ireland's early adoption and the CBI's commitment not to gold-plate the regime provide regulatory certainty for new launches and a straightforward path to re-domiciling or replicating strategies in Ireland. This also provides comfort for investors who want consistent standards on leverage, risk management and borrower protection across jurisdictions.

Industry capacity and service excellence

Private credit structures are operationally demanding. They require specialist providers with the capacity to handle complex drawdown and distribution mechanics, detailed loan servicing and covenant monitoring, and enhanced reporting expectations from investors and regulators alike. Ireland is well-positioned on this front, with approximately 20,000 people directly employed in the Irish funds industry, 120,000+ people employed in the wider financial and professional services sector, and universities and institutes producing roughly 85,000 graduates each year. This talent pipeline fuels a competitive ecosystem of fund service providers, with latent capacity to support further growth in private assets in general and private credit in particular.

Speed to market and regulatory certainty

Ireland's longstanding 24-hour approval process for many regulated fund structures, including professional investor ELTIFs, is a key differentiator for managers who need to move quickly. Taken together with the CBI's transparent supervisory approach and the recent modernisation of the AIF Rulebook which aligns with the Irish Government's Funds Sector 2030 recommendations, asset managers have a high degree of predictability on timelines and conditions - critical when launching time-sensitive strategies.

Treaty-efficient structuring for U.S.-linked strategies

The U.S.-Ireland double taxation treaty is a significant advantage for U.S. private credit managers and global investors, especially where strategies involve lending to U.S. borrowers. There is growing demand for treaty-based structures from U.S. managers who want to raise non-domestic capital for U.S. direct lending strategies and wish to optimise tax outcomes for global investors. Ireland permits non-EU AIFMs to establish and manage Irish-domiciled closed-ended loan origination funds, further enhancing Ireland's appeal to third country asset managers who choose to domicile their fund in Ireland to access global capital pools but may not require an EU marketing passport.

Cultural alignment with key asset management centres

Ireland is culturally aligned with the U.S. and the UK, sharing a common law regime, official language, and a similar business culture and work ethic. For many asset managers, Ireland feels like a natural extension of their home market, simplifying everything from boardroom dynamics to documentation style. This natural cultural fit also supports smoother collaboration between portfolio teams and Irish-based fund governance structures.

Physical connectivity that supports good governance

Connectivity may sound like a small detail - until senior investment and risk professionals need to attend board meetings. Ireland is hard to beat for connectivity, with direct flights from Dublin to approximately 190 cities worldwide, including 21 U.S. cities. With the UK, this figure is even more competitive, with more than 90 daily flights on average between Dublin and London.

Cost-competitive ecosystem and tax neutrality

Ireland's thriving ecosystem of third-party AIFMs, fund and loan administrators, depositaries, legal advisers and other service providers creates healthy competition on pricing. For managers, this means cost-competitive fund servicing even for bespoke strategies, no subscription or AUM-based taxes imposed on Irish funds, and familiar tax-neutral fund structures that integrate smoothly with onshore and offshore vehicles.

Alignment with key market trends

Two trends stand out in today's private credit market, and Ireland is well positioned on both fronts. First, the shift toward evergreen or semi-liquid structures - Ireland is a renowned domicile for open-ended structures and home to 75% of the European ETF market. Second, growing demand for asset-backed finance strategies - Ireland's Section 110 SPV regime is already the vehicle of choice for such asset-backed strategies as aviation finance, bank securitisations and CLOs, making it a logical home for asset-backed finance strategies.

What asset managers and investors are saying

Regulation and statistics tell one part of the story. Manager and investor experience tell the rest. At a recent private credit event in London, a panel titled "Why credit managers are turning to Ireland," featuring representatives from leading global asset managers, shared insights on choosing Ireland as a domicile for direct lending funds.

A few key themes emerged. Managers reported that investors viewed onboarding to Irish funds as more efficient and user-friendly than in other major European domiciles, citing clearer AML/KYC expectations and fewer transaction-related procedural challenges. Panellists also emphasised the high calibre of local service providers and independent non-executive directors, alongside the solutions-focused approach of industry participants as core strengths of Ireland.

At another Irish Funds seminar in Milan, several asset managers contrasted their experience of setting up in Ireland with other domiciles. One remarked that while a rival jurisdiction made the asset manager feel "like a number" they were made to feel "special" in Ireland - reflecting the personal, bespoke service that has become a hallmark of the Irish funds industry.

For further information, contact:

Graham Roche

Director, Private Credit and Debt Solutions

graham.roche@iqeq.com

Paul Griffith

Head of Commercial,

UK and Ireland

paul.griffith@iqeq.com