Expert panel discussion | Credit facilities in private equity
20 May 2020
The Irish Minister for Finance, Mr. Paschal Donohoe, recently published the Investment Limited Partnerships (ILP) (Amendment) Bill 2019. In the amended ILP Bill, we see much needed changes to the existing legislation that will increase Ireland’s attractiveness as a jurisdiction of choice for closed-ended strategies such as real estate, private equity, debt, venture capital and infrastructure. These highly anticipated changes will close the gap between Ireland and other leading European jurisdictions where funds are domiciled.
The ILP Act provides for the establishment and operation of a regulated ILP structure. The ILP can be used in conjunction with the Alternative Investment Fund Managers Directive (AIFMD), which allows managers registered under AIFMD, to market their funds across the EU and EEA using the European funds marketing passport license/mechanism.
An ILP is a limited partnership fund structure, which is constituted, pursuant to a Limited Partnership Agreement (LPA), where one or more General Partners (GPs), enter into an agreement, with any number of Limited Partners (LPs). An ILP must have an Irish domiciled GP, who will conduct the day-to-day business of the partnership.
The assets and liabilities of the partnership are owned proportionately by the LPs, with their liability being limited to the extent of their capital account. The GP is liable for any debt, liability, or obligation greater than the value of the partnership. As ILPs constitute a collective investment undertaking, there is no tax exposure at a fund level, and the ILP remains tax transparent, making this an attractive structure for investors wanting to maintain their current tax status. An ILP must appoint a licensed AIFM, which may be Irish or EU domiciled. In addition, the ILP must appoint an Irish domiciled administrator and depository to perform the respective functions required under AIFMD.
Modifying the provisions relating to withdrawals or redemptions to reflect other forms of collective investment schemes.
The proposed amendments are set to reflect the significant changes in the global closed-ended environment, in terms of modernisation of the ILP in terms of the relevant EU legislation. The Irish Government stated, in the “IRELAND FOR FINANCE - Strategy for the development of Ireland’s international financial services sector to 2025”, that the modernisation of the existing ILP legislation, is a key strategic priority to enhancing Ireland’s position as a leading global fund domicile, now, and into the future.
It is expected that the changes will greatly enhance the attractiveness for both investment managers and investors alike. The ILP can cater for all major investment strategies and is a suitable vehicle for alternative assets, credit, lending vehicles, managed accounts, hybrid funds and hedge funds. The updated limited partnership regime will further enhance Ireland’s position as one of the leading international fund domiciles. Coupled with the potential removal of the National Private Placement Regime, this will become an intriguing option for Non-EU managers seeking access to capital in Europe.
We have a fully licensed third-party AIFM and Management Company (ManCo), with an office in Dublin, Ireland. The Firm delivers fund solutions to renowned investment managers and fund initiators. SANNE (Ireland) is a fully licensed and regulated administrator with the ability and expertise to service all asset classes.
This positions SANNE to give investment managers and fund sponsors the ability to realise their investment ideas through turnkey solutions in all aspects of management, governance and servicing of the investment fund structure and supporting vehicles. We provide our clients with a full suite of corporate, fund administration and depository services allowing them to focus on the management of the investments.
For further information on our services please contact Philip Dempsey and James Kay-Hards.