Kieran Fox, director of business development at Irish Funds, said on Wednesday that the growth would be driven by a “significant“ rise in private equity funds and an expansion in the number of loan origination AIFs.
Total net assets of Irish-domiciled AIFs grew by nearly 17% in 2015 to €452bn (£360bn, $508.6bn), and over the past five years since 2010 net assets are now up 220%, he said.
Fox said he was expecting enhancements to Ireland’s Investment Limited Partnership Act to make it friendlier toward private equity funds looking to set up in the Irish capital.
Shadow banking
Irish Funds is also expecting that the EU will introduce standardised regulations for loan origination funds across the region.
“Europe has a low level of non-bank financing compared with that of the US,” he said.
In 2014 the Central Bank of Ireland authorised qualified investor AIFs to engage in loan origination, which made Ireland the first EU member state to introduce a specific regulatory framework for loan originating investment funds.
A fund was set up following the Central Bank move but Fox said it was “not used widely”.
ESMA agrees
However, earlier this week the European Securities and Markets Authority (ESMA) published its opinion of the necessary elements for a common European framework for loan origination by investment funds.
The publication was in anticipation of a pending consultation by the Commission on loan origination funds, which it is due to issue in the second quarter of 2016.
ESMA’s opinion encouraged the Commission to look at existing national approaches and regimes in devising a common EU framework, which may be provided for under a legislative proposal or by way of an ESMA instrument supplementing the AIFMD, giving hope that a common framework will emerge.
“ESMA is of the view that a common approach at EU level would contribute to a level playing field for stakeholders, as well as reducing the potential for regulatory arbitrage,” it said.
“This could in turn facilitate the take-up of loan origination by investment funds, in line with the objectives of the Capital Markets Union.”
