www.irishfunds.ie Irish Funds Frankfurt Seminar 2016 Hosted by: 2 - - PowerPoint PPT Presentation

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Irish Funds Frankfurt Seminar 2016

Hosted by:

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Mr Markus Buechter Deutsche Bank AG

Welcome

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Mr Frank Dornseifer

Managing Director Bundesverband Alternative Investments e.V. (BAI)

Introduction

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BAI – the cross-asset and cross-product association for Alternative Investments

BAI/Irish Funds Event: Ireland meets Germany: new trends in the European alternative funds industry

FRANKFURT, 12 September 2016

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BAI – key facts (1)

• Founded 1997 in Bonn – based in Germany, European focus.
• At present, BAI counts 165 member companies from all areas of the alternative investment industry.
• BAI is a “catalyser” between German institutional investors and suppliers of alternative investment

products worldwide (infrastructure, private equity, hedge funds, real assets, etc.). Our goal is to enhance the environment for German professional investors when diversifying their financial assets into Alternative Investments, especially as many of those investors are responsible for safeguarding long-term retirement pensions.

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BAI – key facts (2)

• Another objective of the association is to increase the awareness level and the understanding of

these asset classes and strategies in public (c.f. BAI Fact Sheet series, BAI science award).

• 2012 establishment of BAI Investors Committee with representatives of relevant investor groups

(insurance companies, pension funds, pension schemes, corporates, etc.).

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CONTACT

RA Frank Dornseifer Managing Director Bundesverband Alternative Investments e.V. (BAI) +49 228 969870 dornseifer@bvai.de

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H.E. Michael Collins

Ambassador of Ireland to Germany

Ambassador’s Address

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Kieran Fox Director – Business Development Irish Funds

Irish Funds Overview

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Who/what we are….

• industry association for all aspects of regulated cross border funds

in Ireland

– representative function – promotional function

• 113 member firms, located both in and outside Ireland
• key link to the authorities & policy makers in Ireland and beyond
• the industry’s representative in Europe and globally
• a platform for collaboration, information sharing and driving
• utcomes & improvement

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The Irish funds industry

• supports managers from all over the world
• full range of services for Irish domiciled

funds as well as providing expert services for funds domiciled outside of Ireland

• solutions are provided to managers

across the full spectrum of investment strategies

Fund Manager Irish Administered Funds Irish Domiciled Funds UCITS AIFs Non Domiciled Funds

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Long track record of delivery

Total Assets under Administration, Euro billions

Source: Central Bank of Ireland and Irish Funds

362 434 584 728 807 646 748 964 759 1,227 1,344 1,664 1,899 1,917 488 636 838 965 1,394 1,398 1,443 1,883 1,886 2,199 2,722 3,375 3,806 3,760 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 June- 16

EUR Billion Net Assets Domiciled Net Assets Non Domiciled

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Scale, Diversity and Momentum to support you

Irish Domiciled Funds – Product Breakdown Euro billions

Source: Central Bank of Ireland and Irish Funds

285 343 463 583 647 517 597 759 759 968 1,044 1,275 1,447 1,447 362 434 584 728 807 646 748 964 1,055 1,227 1,344 1,664 1,899 1,917

500 1,000 1,500 2,000 2,500 500 1,000 1,500 2,000 2,500 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 June- 16

EUR Billions EUR Billion UCITS Non Ucits

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Irish Domiciled Funds: AIFs

Qualifying Investor Alternative Investment Funds (QIAIFs)

QIAIFs

Net Assets and Number of Funds

Source: Central Bank of Ireland

28 44 67 93 109 94 113 153 182 204 235 317 369 385 457 541 648 826 1,028 1,115 1,174 1,217 1,420 1,664 1,849 1,902 1,961 1,965 500 1,000 1,500 2,000 2,500 50 100 150 200 250 300 350 400 450 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 June- 16 Total No. of Funds EUR Billion Net Assets (EUR Billion) Number of Funds

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German Promoters of Irish Funds

73% 10% 7% 3% 3% 2% 1% 0% 0%

Asset Allocation of German Managed Irish Funds

Cash/Short-Term Exchange Traded Equities Equities Bonds Mixed Equities/Bonds Convertibles Alternative Investment Private Equity/Venture Capital Fund of Funds Source: Monterey Ireland Fund Report 2015

 7 German promoters of with 96 Irish domiciled funds & $47 billion in AUM  81 UCITS funds 15 AIFs  7 German promoters of with 96 Irish domiciled funds & $47 billion in AUM  81 UCITS funds 15 AIFs

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What does the industry in Ireland provide?

• EU Single Market Access: product & service passports
• Investor Access: European Market and beyond
• Service Excellence
• Low Costs
• Low Tax Environment
• Regulatory Environment
• Commitment from Government
• Infrastructure : language/legal/telecommunications

7th

IMD WORLD COMPETITIVENESS 2016 YEARBOOK

1st

FLEXIBILITY AND ADAPTABILITY OF PEOPLE

1st

IN EUROPE FOR COMPLETION OF 3RD LEVEL EDUCATION

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Brexit:

Beyond the Referendum on EU Membership

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Managers’ needs pre/post vote have not changed

 Objective to grow/scale their businesses cross-border by accessing passports for products and services  Effective EU based national regulatory and taxation regimes are vital enablers  Expert knowledge/skills across a range of providers covering the full breadth of investment strategies/asset classes very important  Being able to conduct business efficiently is expected (language, legal system, service culture, cost)

Ireland has done this very successfully for over 20 years

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Why Ireland? Distribution and investor support

Source: Lipper, PwC & Irish Funds, 2015

• broad mix of institutional and retail clients
• 30 languages supported
• 23 currencies supported

Global Distribution of Irish Funds: 70 countries

24% 22% 20% 18% 17%

United Kingdom Germany France Switzerland Netherlands

Sales Registration: Top 5 Markets for Irish UCITS

Source: Lipper, PwC & Irish Funds, 2015

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UK Referendum & “Brexit”

• The outcome was a surprise to most
• Things which are certain/clear:
• Ireland remains a committed member of the EU
• Irish domiciled funds’ access to the EU single market unchanged
• UK remains a member of the EU for the foreseeable future
• Big questions to which there are not yet clear answers
• UK’s status at the end of the process?
• When will the process start?
• How long will the process last?
• Questions we are being asked by managers - how can they work with

Ireland to retain access to the EU in providing?:

• Direct portfolio management services
• Funds
• Our members are helping managers and providing solutions

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Assumption risk

Assumption/ Noise Reality Impact

Pre Referendum Will be close but UK will vote to remain in Narrow vote to leave Most entities unprepared Post Referendum Article 50 notification will happen very quickly Seems to be moving further away Pre-exit period will be very lengthy Passports and access remain unchanged until the UK actually leaves so little to do right now Depends on strategies you manage/delivery mechanisms/target market(s), your business model and what clients want Staying informed important to know where you need to act now and to minimise future assumption risk UK won’t implement EU regulations going forward Still full EU members and part of ESMA Equivalence as a 3rd Country highly relevant Too early to tell

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Key Focus Areas

• UCITS

–Product based passport linked to EU domicile –No equivalence or 3rd Country rules –Pre-existing routes remain open

• AIFMD

–Two passports (management & marketing) – linked to manager –Passport (EU AIFMs) & Private Placement (Non-EU AIFMs) co- exist at present – 3rd Country access, equivalence still a work-in-progress which complicates matters

• MiFID

–Passporting rights attach to EU based firms –Which services/clients are UK based MiFID entity working with? –MiFID2 on the way – again take care

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Our activity since the vote

• Engage with Irish government, regulator, agencies

– Funds industry high on the agenda – Ireland ready and able to provide help to those who need it

• Alongside our 39 Working Groups we are breaking the “big” question into a

number of smaller ones – Identifying/working through positions which may arise in the negotiations – Develop specific communication and information aids – Engage with EU colleagues

• Meeting with our members / handling inbound enquiry
• Speak to other stakeholders / peers

– Listening & acting responsibly

• Ensure we can assist managers irrespective of their starting point

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Some things we are seeing post the vote/more recently

• Management Companies (ManCos)

– UCITS: interest in establishing Irish UCITS ManCos to ensure EU access continues irrespective of outcome (product holds the passport) – AIFMs: UK AIFMs looking to preserve EU marketing access considering establishing an Irish AIFM, appointing an Irish AIFM or using a platform

• European clients/segregated mandate solutions under MiFID

– a potential question where EU based client wants to contract with an EU based provider of services

• Offerings aimed at pension fund investors in multiple jurisdictions

– Preserving tax transparency important - more inbound enquiry on the Irish Common Contractual Fund (CCF) – Irish CCF Master/Local Feeders in both EU and non-EU markets

• Solvency II related

– More onerous liquidity requirements impacts how collateral provided – Can funds/fund units play a part?

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Other local developments……….

• Updating of Ireland’s Investment Limited Partnership Legislation
• Approved by Irish Government / legislation being worked on at present
• Will provide additional scope for private equity and real asset funds
• ESMA advice on possible extension of the AIFMD passport
• published on 19 July 2016
• will now be considered by the European Commission, Parliament and

Council

• EU Capital Markets Union
• Call for evidence submissions completed in January 2016
• We have subsequently met with the European Commission
• Project will continue despite UK position

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Teddy Otto Director Carne Group Torsten Hunke General Counsel Van Eck (Europe) GmbH

Q&A: The Investment Manager’s Experience in Ireland

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• Stephen Carson, Partner, A&L Goodbody
• Sarah Murphy, Director, PwC
• Alex Nightingale, Head of Transaction Management Group -

Investor Services, Deutsche Bank AG

• Dr. Edgar Wallach, Partner, Hengeler Mueller

Panel Discussion: Ireland as a Domicile for Alternative Funds

Moderator Panellists

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Stephen Carson Partner A&L Goodbody

Ireland as a Domicile for Alternative Funds

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Irish Domiciled Funds: AIFs

Qualifying Investor Alternative Investment Funds (QIAIFs)

QIAIFs

Net Assets and Number of Funds

Source: Central Bank of Ireland

28 44 67 93 109 94 113 153 182 204 235 317 369 385 50 100 150 200 250 300 350 400 450 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 June- 16 EUR Billion Net Assets (EUR Billion)

Global Hedge Funds Serviced in Ireland 2,341 Irish Domiciled AIFs

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Qualifying Investor Alternative Investment Funds (QIAIFs)

What is a QIAIF?

• Existing “Qualifying Investor Fund “ (QIF) adapted by the Central

Bank of Ireland for AIFMD.

• “Qualifying Investor Alternative Investment Fund” (QIAIF) is the

leading European cross-border alternative investment fund.

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Qualifying Investor Alternative Investment Funds (QIAIFs)

Key Features

• No investment restrictions
• No leverage restrictions
• No limit on types of assets which can be held
• Open-ended, open-ended with limited liquidity or closed-ended
• Broad range of legal structures:

–ICAV / Variable Capital Company –Unit Trust –Common Contractual Fund –Investment Limited Partnership

• Qualifying Investors
• Umbrella funds with segregated liability

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Qualifying Investor Alternative Investment Funds (QIAIFs)

Key Benefits

• Speed to Market

–24 hour authorisation process

• Investment Flexibility
• Tax Efficiency

–No subscription tax

• Tried and Tested
• Regulated Status
• Pan-European Passport

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Investment Product Update

ICAV

• Large increase in AUM
• Over 180 ICAVs registered since March 2015
• Used by large German asset managers (e.g. Deutsche Bank,

Allianz)

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Investment Product Update

L-QIAIF

• Central Bank of Ireland launched L-QIAIF (Loan Origination QIAIF)

in 2015.

• Several L-QIAIFs have been launched since with more in the pipe

line

PE Fund Reform

• Legislation is being worked on to reform the Investment Limited

Partnership structure in Ireland

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Frank Dornseifer Managing Director Bundesverbank Alternative Investments e.V. (BAI)

Closing Remarks & Thank You

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Irish Funds Frankfurt Seminar 2016

Hosted by: