WAYS TO N E
GROWING ROLE for investment advisers in ILP launch space
T
he path has been laid for investment advisers to benefit from Ireland’s Investment Limited Partnership (ILP) structure when launching private assets funds. Many players in the private equity space do not currently have a fully scoped MiFID license which might have precluded them historically from making use of certain structures. But this barrier has been broken as it relates to the ILP, even though investment advisers must remain mindful of their choice of service providers. Vanora Madigan, executive director, Waystone, details the firm’s experience in this area, having been one of the first, if not the first, to have a fund with an investment adviser appointed as part of the structure which was approved by the Central Bank of Ireland. Launching a fund involves many moving parts which include the various service providers, the depository, auditors, general partners and limited partners. One of these elements is also the discretionary asset manager. Madigan outlines: “In the PE world, many managers might not have a full MiFID license, so they are classified as investment advisers. We understand we were one of the first, if not the first,
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AIFM to successfully launch an ILP with an investment adviser, having had the structure authorized by the CBI.” The experience means Waystone now knows what the central bank focuses on when considering these funds for approval. “They looked at the taxonomy of responsibility and how that was split out between the different roles each party plays. For instance, Waystone was acting as the investment manager in this fund. This means the investment adviser would put forward recommendations in terms of which assets and which deals to invest. The CBI also examined the fee structure very closely, how this was being split and the rationale behind it,” Madigan explains. She also highlights the attention given to the role of the Alternative Investment Fund Manager (AIFM), since in this case Waystone was acting as the fund’s external AIFM: “Typically, the investment adviser would review the expertise and track records of the PE investments, but the AIFM certainly has a role to play in this structure. Having this AIFM experience and expertise was critical in getting this fund authorised by the central bank.” The fund Madigan is referring to, was
the first of its kind but she believes it has now opened the road for more investment advisers who may not have a full MiFID licence but are looking to launch ILP funds in Ireland. “The pre-submission and preengagement phase was also key in the process and the CBI was satisfied on our role and the substance, resourcing and expertise as AIFM,” she observes. Madigan further underlines the role Waystone plays in the process: “We’re very comfortable in being able to provide this service to other investment advisers. When considering such a fund for launch, the central bank not only looks at the investment adviser itself but it will also focus on the AIFM. So, although the investment adviser is responsible for the selection of assets, the AIFM needs to retain complete control to proceed with those investments and investment recommendations.”
GOOD FIT FOR ESG
The ILP structure is also a good fit for new PE, infrastructure and green energy projects. “Looking at our pipeline since March last year, we can see that new funds being launched have a focus on SFDR classified article 8 (light green) or
IRELAND ILP IN FOCUS | MARCH 2022
