Irish Limited Partnership: A New Dawn

Irish Limited Partnership: A New Dawn for Private Markets in Ireland

The Investment Limited Partnership (Amendment) Act 2020 has modernized the Irish Limited Partnership with flexibility to rival its overseas counterparts and provided the vehicle with significant advantages to allow the local market to capitalize on the massive growth in Private Markets.

Years of experience and an impressive support infrastructure have earned Ireland one of the world’s leading positions in servicing regulated alternative investment funds. One area, however, where Ireland struggled in the past was not having an appealing partnership type investment structure.

Although the Irish Limited Partnership vehicle has been around for over 25 years, it never gained market popularity due to its operational and regulatory limitations. Recently, the global growth in Private Markets has prompted the Irish government, encouraged by the local funds industry, to pass the Investment Limited Partnership (Amendment) Act 2020. Modernised with unprecedented flexibility, the ILP is now set to allow the market to capitalize on the enormous growth in Private Equity, Real Assets and Private Debt investments globally.

Defining characteristics of the ILP

• The ILP Umbrella structure enables the establishment of multiple sub-funds launching underneath that umbrella. Each sub-fund will have segregated liability allowing them to operate as stand-alone investment vehicles in their own right. For example, one could have a Private Equity, Real Assets, Infrastructure and a Private Credit Investment sub-funds all under the same umbrella but in four different investable pools.

• Ability to rebrand or re-script the name of the ILP to allow for marketing in different jurisdictions, for example in non-English speaking countries including the likes of Japan or China with different text characters.

• The ILP structured as an AIF (QIAIF)s are not subject to legal risk spreading obligations, making them suitable for concentrated portfolios.

• Assuming all participants are already approved by the CBI, an ILP can avail of the CBI 24 hour approval process.

• The ILP facilitates common partnership allocation rules, such as excuse and exclude, allows stage investing and permits management participation through ‘Carry’.

• New beneficial ownership rules, such as a 25% threshold, for ILPs are now aligned with existing rules that apply to funds established as companies, ICAVs and unit trusts.

• A statutory process to facilitate ILP migration into and out of Ireland has been introduced to align arrangements with those in the Companies Act 2014 and the requirements for other types of funds, such as those detailed in the ICAV Act 2015.

• Alternative Investment Fund Managers Directive (AIFMD) alignment of norms and standards in relation to terminology and requirements (such as the depositary function).

We expect a lot of interest to come from the UK and US Hedge and Private Markets investment managers looking to enter EMEA for the first time as they are familiar with the Irish Regulatory environment via their more traditional assets and wish to avail of the EU passporting rights.

The ILP is an very important development for the industry here and one that we believe is likely to make Ireland a preferred domicile for Private Market Limited Partnerships in the future.

Kevin Hogan, Managing Director, Head of Product, Alternatives EMEA at State Street

Contributor Profile

Kevin Hogan is Managing Director, Head of Product, Alternatives EMEA at State Street. With over twenty five years of experience in the funds industry, Kevin has held a number of senior and managerial positions and re-joined State Street in 2014 as a Head of Strategic Operations and subsequently COO for Private Markets in Europe with his responsibilities including the development of the EMEA and Global location strategy, Target Operating Model Deployment, leading the change management process and facilitating large client transition initiatives.