Ross McCann, Head of Fund Services in Alter Domus Ireland: ICAVs have been the AIF vehicle of choice in Ireland since their launch in 2015 and have gained increasing popularity over that period. Within the total number of ICAVs mentioned (385), over 40 were authorised in the first six months of this year.

The segregated sub-fund umbrella structure has been a critical feature in the success of ICAVs and when additional sub-funds are accounted for, the total extends to over 1,400. We see ICAVs serving several purposes within global fund structures as both European feeders and master funds. In the private asset sectors, many asset managers and their investors have been able to get comfortable with the corporate characteristics of the ICAV in the absence of a credible Irish partnership offering.

The ability to offer itself as an opaque corporate entity for tax purposes and its ability to ‘check the box’ means ICAVs will continue to be popular for ‘US treaty type’ structures. The long-awaited legislative enhancements to the Investment Limited Partnership was like adding a brand new product to the Irish offering and provides managers with a credible alternative to Luxembourg when it comes to European fundraising using regulated limited partnerships.

We are also seeing the ILP being used as a regulated European feeder in certain circumstances. Over the past six months, we have seen queries around ILPs turning into opportunities and now genuine new business. We expect this to grow significantly over time as familiarity and structuring opportunities become even clearer.

Niamh Ryan, Partner, Simmons & Simmons: The success of the ICAV is not surprising due to the fact that before the ICAV, the plc, was always the most popular choice for managers as it was easiest to establish. Once the ability to segregate sub-funds across an umbrella was written into Irish law, that made the plc even more attractive. The disadvantage of the plc was that it remained subject to general company law requirements which were not always appropriate for fund structures as well as the fact that it was not tax transparent.
Therefore the arrival of a fund specific corporate vehicle in the form of the ICAV was welcomed. The ability for it to check the box for US tax purposes was also much welcomed and again was a significant difference to the plc. It remains very popular as it is easy to establish and managers and investors are familiar with corporate vehicles. The CCF is a tax transparent vehicle formed under the laws of contract between the management company and the depositary. It works well for pension funds although it is not exclusively for pension funds and it is only available for institutional investors. Investors are deemed to own the underlying assets of the CCF and therefore from a tax perspective, investors can usually benefit from lower withholding tax rates or exemptions which may not be available if they invested through the ICAV, as there is a look through from the investors to the underlying assets.

While it can be more expensive to establish due to the need for it to have a management company, that expense can be balanced by the tax benefits ultimately. Also it is worth noting that most ICAVS, whether UCITS or AIFs, now need to appoint a management company or establish their own management company and accordingly the difference in establishment costs may no longer be that significant. Finally the updated ILP is clearly still in early stages with quite a way to go before competing as a vehicle with the longer established ICAV and CCF. It is intended for private equity type assets and so as managers become more familiar with it as a vehicle and with Ireland as a jurisdiction for that asset class then the expectation is that we will see more new ILPs being established.

Tadhg Young, Executive Vice President, Country Head – Ireland, State Street: The data is not surprising and demonstrates the continued growth of Ireland as a domicile for investment funds, as well as Ireland’s offering of the spectrum of legal structures required to support all investment fund product and investor types the market demands.
The Irish Collective Asset Management Vehicle (ICAV) is the bespoke corporate structure for funds and is available to both UCITS and AIFs. It is also the most commonly used legal structure. An ICAV may elect to be taxed as a partnership for US federal tax purposes (meaning a US investor is placed in the same tax position as if they had invested in the underlying investments of the ICAV), rather than as an opaque company subject to the Passive Foreign Investment Company (PFIC) regime. As an ICAV is not required to be incorporated under the Irish Companies Acts, it is administratively less onerous than the Public Limited Company (PLC) structure and is therefore more cost efficient.

The ILP, though still only in the early stages of adoption by managers, is becoming increasingly attractive to managers in the private markets sector globally, particularly from North America and the United Kingdom, who are looking to access the European market. The ILP has been designed to provide the flexibility and benefits seen in partnerships in more traditional private equity fund domiciles but within a regulated on-shore vehicle in a common law jurisdiction that may avail of the European Union’s Alternative Investment Fund Managers Directive (AIFMD) marketing passport. It is a tax transparent vehicle that is not subject to Irish withholding taxes on distribution and retains the VAT exemptions enjoyed by other regulated Irish funds.

In addition, similarly to the ICAV, the ILP has ‘check the box’ capability in relation to US tax reporting.

The continued strong growth in the use of the CCF structure is due to it being a highly tax transparent vehicle which differentiates the CCF from other legal structures available in Ireland. The CCF is a contractual arrangement available to institutional investors and is established under a deed, which provides that investors participate as co-owners of the assets of the fund. Furthermore the CCF facilitates institutional investors pooling their investments thereby creating economies of scale resulting in the potential for lowered costs, while maintaining withholding tax benefits.
Meliosa O’Caoimh, Country Head – Ireland, Northern Trust: A critical success factor for the Irish industry historically has been our ability to support all client and fund types and strategies. Over the last ten years, Ireland successfully onboarded the AIFMD and UCITS V frameworks and created a number of new fund types – with the ICAV proving particularly popular with clients.

In addition, a hallmark of Ireland’s continued success over decades has been our continued innovation and client-friendly approach to doing business – a key part of which has been a sustained programme of product and service innovation in tax-efficient funds, further developing the ICAV and the recent launch of the ILP. Against this backdrop, Ireland is competitively positioned to continue as a natural home for a range of traditional and alternative strategies, supported by a well-regulated and thoughtfully-planned framework for investment funds.