Financial Services Ireland

Wealth & Asset Management

Ireland’s new investment partnership regime

On December 23, 2020, legislation was enacted in Ireland allowing for the establishment of enhanced Investment Limited Partnerships (ILPs). The ILP structure gives more flexibility for asset managers to manage alternative investment strategies including: private equity, private credit, venture capital, infrastructure, renewable energy and real estate.

Key features

Legal, tax and regulatory framework

Each ILP will be established pursuant to a limited partnership agreement between a general partner (GP) and limited partners (LPs)
The ILP is a regulated entity, capable of being authorised within 24 hours by the Central Bank of Ireland
An ILP is regulated in accordance with AIFMD
An ILP can be formed as an umbrella type structure with segregated liability between sub-funds
An ILP can be either an open-ended or a closed-ended structure
No material investment restrictions or borrowing limits
No statutory risk-spreading obligations
No restrictions on the use of financing
Facilitates accrual of carried interest and incentive fee arrangements
A framework exists to allow for the migration of existing partnerships in other jurisdictions into Ireland

Investors / LPs

The ILP is tax transparent, ensuring tax neutrality for investors.
There are no limits on the number of LPs; or GPs if using an umbrella structure
As a partnership regime, the ILP gives promoters flexibility to tailor specific investment returns depending on their desired investment strategy which facilitates efficient entry and exit investment mechanisms
Closed ended ILPs should facilitate investors including “excuse and exclude provisions” in their mandates
If required, the LPA may be modified with the support of a simple majority of LP’s.

Distribution (for Qualifying Investors)

Can avail of pan EEA marketing passport under AIFMD
Can be registered for sale in other jurisdictions in accordance with local securities laws

Financial and regulatory reporting

There is a requirement for an annual audit
Financial statements can be prepared using a variety of GAAP frameworks (IFRS, FRS, US GAAP)
Regulatory reporting to the Central Bank in accordance with AIFMD will also be required

How we see it:

The ILP adds to Ireland’s already extensive choice of fund vehicles available to asset managers including the ICAV, CCF and Unit Trust and the unregulated 1907 partnership structure.
The ILP can replicate existing Cayman/Delaware investment structures in the EU, including how to structure for incentive fees/carried interest.
As a result, we see Ireland becoming a leading domicile for Investment managers looking to align their investors and investments with a flexible regulated partnership particularly in alternative investment strategies, private equity, private credit, venture capital, infrastructure, renewable energy and real estate funds. It will also help to facilitate long-term investments in renewable energy, energy efficiency, carbon capture and climate transition finance projects.

Don’t hesitate to reach out if you have a question.

Thought Leaders

Sinéad Colreavy

FS Partner, Business Tax Advisory

Fergus McNally

FS Partner, Alternative Funds Leader

Lisa Kealy

Wealth & Asset Management, Sector Leader

Donal O’Sullivan

FS Partner, Tax

Dean Phillips

FS Associate Partner, Wealth & Asset Management