Focus On Private Funds Will Boost Ireland's Global Standing

April 29, 2024

This article was originally published by Law360. 


It is no secret that in recent years, investors and managers have become increasingly focused on private markets and the private funds that provide access to them.

This interest has been primarily driven by the expectation that public markets will offer reduced returns in the future, with outsized returns being more likely to occur in private markets going forward.

As such, institutional investors and pension funds among others are now allocating greater portions of their capital to private markets via private equity, private credit, direct lending, loan origination, infrastructure, property and venture capital funds1.

Ireland is, without question, a leading fund domicile for highly regulated investment funds, including, in particular, undertakings for collective investment in transferable securities, undertakings for collective investment in transferable securities-based exchange-traded funds and money market funds.

However, for various reasons, it hosts smaller levels of alternative assets compared with its peers and is at risk of not being in an optimum position to capitalize on the ascending trajectory of the private funds space.

We believe that it is crucial for Ireland to enhance its private funds offering to maintain its standing as a global domicile for investment funds as the market increasingly pivots to private funds.

In this article we will discuss some of the issues that have contributed to Ireland's sluggish move toward private assets, while also highlighting some recent developments that point toward a brighter future.


When it comes to alternative investment funds, a key distinction between Ireland and other jurisdictions is Ireland's approach to fund or so-called product-level regulation.

Currently, the framework in Ireland is broadly such that both the fund and the alternative investment fund manager must be regulated — this additional product-level regulation has led to practical complications and the slower-than-expected development of Ireland as a domicile for private funds.2

The two most popular and well-known private fund products in Ireland are qualifying investor alternative investment funds3 and loan originating qualifying investor alternative investment funds,both of which are regulated at product-level by the Central Bank of Ireland, or CBI, pursuant to the alternative investment fund rule book and its associated guidance5.

The additional CBI product-level rules have led to some challenges when it comes to the structuring of certain types of private funds in Ireland.

Some examples of this include:

  • The broad application of the prohibition on granting loans by qualifying investor alternative investment funds: Only loan originating qualifying investor alternative investment funds can engage in loan origination, and the prohibition on a qualifying investor alternative investment fund from acting as a guarantor on behalf of third parties — these prohibitions are not consistent with how typical private equity strategies operate and the typical fund financing arrangements, such as bridge financing, put in place by private funds; and
  • The rules and requirements in the CBI's alternative investment funds Rulebook in relation to investment through subsidiary companies, which are practically burdensome in the private funds space and go beyond the protections set out in the Alternative Investment Fund Manager Directive6.

Until recently, the only real alternative to the qualifying investor alternative investment fund or the loan originating qualifying investor alternative investment fund for a private fund in Ireland was a partnership structure set up under the Limited Partnership Act of 1907 — the only fund product not regulated by the CBI7.

To date the 1907 limited partnership has been predominantly used in the venture capital industry, for infrastructure funds and, on a smaller scale, for private equity.

However, as the 1907 act was not drafted specifically for the funds industry,8 there are a number of difficulties with using the structure for private funds, making it less popular than equivalent structures available in other jurisdictions.

These include the lack of a value-added tax exemption on management services, which is currently available only to funds regulated by the CBI; limits on the number of investors a 1907 limited partnership may have; and effectively requiring 1907 limited partnership to be funded via debt or loans, rather than equity. For these reasons it has not attracted widespread use.

Recent Developments

There have, however, been some promising developments recently with the introduction of an updated, flexible European long-term investment fund, or ELTIF, framework and the recognition in the Department of Finance's Funds Sector 2030 review that further attention and development of Ireland's private funds offering is needed if Ireland is to establish itself as a serious player in the area.


With the introduction of the ELTIF in Ireland in March, a new regulatory wrapper is available for private funds in Ireland. This is more flexible, in many respects, than the current regimes that apply to qualifying investor alternative investment funds and loan originating qualifying investor alternative investment funds. 

We believe that the professional investor-only ELTIF, in respect of which there are limited investment restrictions, and to which restrictions apply across all European jurisdictions, offers a significant opportunity for Ireland.

We expect that the professional investor-only ELTIF will likely be an attractive option in Ireland going forward as an alternative to the qualifying investor alternative investment fund or the loan originating qualifying investor alternative investment fund — in addition to its promise in enabling the retailization of private assets that an ELTIF targeted at retail investors offers.

This is primarily due to the lack of additional Irish product-level investment restrictions on the professional investor-only ELTIF and the professional investor-only ELTIF's status as a regulated product9.

The table below highlights the flexibility and opportunity that the professional investor-only ELTIF presents for private funds in Ireland, and also provides an overview of some of the key considerations relevant to private fund structuring in Ireland. It has been prepared on an asset class agnostic basis in order to highlight the full range of considerations and options in one table.

Note that certain of these considerations may not be relevant or important for particular asset classes or structures.

Although not a solution for all asset classes and fundraises, the ELTIF will certainly be a key new tool in the Irish private fund toolbox and should be seen as an alternative to qualifying investor alternative investment funds.

Funds Sector 2030

In addition to the ELTIF, there have also been encouraging developments arising from the Irish Department of Finance's review of the funds sector in Ireland. The Irish Department of Finance is currently reviewing the sector and last year engaged in a consultation process soliciting feedback from interested parties.

The industry has proposed various changes to Ireland's existing private funds offering that it believes are needed for Ireland to become a domicile of choice for private funds in the future. In our view, the best way to make Ireland more attractive to private fund managers is for Ireland to offer a fund product that aligns with international standards and existing market practice for private funds, and which would not itself be subject to additional product level regulation by the CBI. Such a product would be an alternative to the 1907 limited partnership.

This would assist in meeting the expectations of private fund managers with regard to product offering and support the continued growth of the Irish investment funds sector.

Encouragingly, when the Department of Finance issued a progress update on its review it acknowledged the need for a competitive private funds structure in Ireland and noted that its immediate work would focus on "further understanding the commercial rationale for an unauthorised product structure for private assets and reviewing other structures used for such investment strategies," among other priorities10.


The introduction of the ELTIF, together with a potential revision of the CBI's alternative investment funds rule book to address some of the existing issues therein and an increased focus on private assets via the Funds Sector 2030 review, provides more structuring opportunities and options in Ireland than before and paves the way for a brighter outlook for private funds in Ireland11.


  1. In March 2024, the California Public Employees Retirement System (CalPERS), the biggest public pension plan in the US, agreed to increase its holdings in private markets by more than $30bn and reduce its allocation to stock markets and bonds in an effort to improve returns. This proposal would increase the $483bn pension fund's positions in private assets from 33% to 40% of the pension plan.
  2. The alternative investment fund manager of an Irish AIF will be subject to the Alternative Investment Fund Manager Directive.
  3. Qualifying investor alternative investment funds are alternative investment funds authorised by the CBI which may be marketed to investors who meet the criteria set out in the CBI's AIF Rulebook.
  4. Loan originating qualifying investor alternative investment fundsare an Irish-specific, CBI-regulated kind of AIF that may engage in loan origination, and which are subject to additional rules such as leverage and asset concentration limits.
  5. 2024.pdf?sfvrsn=996a631a_1.
  7. The 1907 limited partnership is formed/registered with the Companies Registration Office as opposed to the CBI and is not subject to any product level regulation.
  8. It is also used for development finance, syndicated ownership structures, estate planning and holding family businesses.
  9. The same rules apply to ELTIFs across Europe, regardless of the jurisdiction in which the ELTIF is domiciled.

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