key takeaways
- We delve into the dynamic rise of private assets - spanning private equity, credit, infrastructure and real estate - which have surged from US$9.7 trillion in 2012 to an estimated US$24.4 trillion by the end of 2023.
- This explosive growth reflects a global shift in investor appetite, driven by the pursuit of higher returns and the increasing accessibility of private markets through innovations like semi-liquid funds.
This article was first published in the Irish Funds Conference Online Magazine 2025.
Introduction
Private assets are generally understood to mean non-publicly traded assets and include, for example, private equity, private credit, infrastructure and real estate. There has been tremendous growth in private assets over the past decade. Growth in global private markets more than doubled from US$9.7 trillion assets under management (AUM) in 2012 to an estimated US$24.4 trillion AUM by the end of 2023.1 There are various reasons for the growth of private assets including institutional investors seeking higher returns and increasing numbers of high-net worth individuals with growing pots of investable capital. Private markets have also become more accessible for investors with the growth of semi-liquid funds and the willingness of managers to allow investors to transfer limited partner interests.
There are significant opportunities for Ireland to grow its share of the private funds market which, to date, has been dominated by offshore funds and certain other onshore domiciles. Change is afoot in the Irish market evidenced by enhancements the Central Bank of Ireland (the Central Bank) has made to its AIF Rulebook, AIFMD Q&A and QIAIF guidance which have introduced helpful changes for managers managing Irish private funds, the publication of the Investment Limited Partnerships (Amendment) Act 2020 (ILP Amendment Act), and the publication by the Department of Finance of its report "Funds Sector 2030: A Framework for Open, Resilient and Developing Markets" (the 2030 Report) (discussed further in "Opportunities for Ireland" below).
Ireland – Evolution of private funds
To date, the Irish Collective Asset-management Vehicle (ICAV) has been the vehicle of choice for managers setting up Irish regulated funds. The ICAV was introduced in 2015 and is a bespoke corporate funds vehicle which can be set up as a standalone fund or an umbrella fund with separate sub-funds. From a tax perspective, the ICAV is tried and tested and works very well for managers. One of the key benefits of the ICAV is its ability to access a vast network of international tax treaties. On the private funds side, the ICAV has had particular success as a product for credit funds (notably for funds originating loans in the U.S, taking advantage of the favourable Ireland-U.S. tax treaty).
As noted above, Ireland has taken steps in recent years to improve its Irish private funds offering. One of the most significant of these steps was the introduction of the ILP Amendment Act which removed drawbacks to the investment limited partnership (ILP) which had existed under the prior ILP regime. The ILP is now a best in class limited partnership structure which is available to managers setting up private funds in Ireland. The ILP operates similarly to a Cayman and English limited partnership as a contractual vehicle without separate legal personality, underpinned by common law principles. ILPs are tax transparent and therefore there is no tax at ILP level with limited partners being treated from a tax perspective as though they had invested in the relevant assets directly. From a tax perspective, the Irish government has also brought about changes under the Finance Act 2024 which introduced a participation exemption for foreign dividends and distributions. This has further bolstered the ILP as a viable fund product for managers seeking to establish private funds in Ireland.
More recently, the Central Bank introduced the ELTIF chapter of the AIF Rulebook to permit managers to establish European Long Term Investment Funds (ELTIFs) in Ireland. The application of the rules set out by Regulation 2015/760/EU, as amended, by the Central Bank into the AIF Rulebook was a success story for Irish private funds as the rules were applied without gold plating and the Central Bank helpfully permits ELTIFs which are established as Qualifying Investor ELTIFs or Professional Investor ELTIFs to be established within 24 hours ensuring speed to market.
The Irish ELTIF is a compelling offering for managers, particularly for managers setting up loan origination funds. One of the key benefits of the ELTIF is that it can be marketed by way of the AIFMD marketing passport across the EU to both retail and professional investors.
Opportunities for Ireland
As noted above, the Department of Finance published the 2030 Report in October 2024 following on from the consultation issued in June 2023. The report was commissioned as part of the government's new international financial services strategy that was launched in October 2022 which restated the government's vision that Ireland should remain internationally competitive and be a top tier location of choice for specialist international financial services. The report is significant as it reaffirms the commitment of the government to implement the "Ireland for Finance – Financial Services Strategy" to continue to deliver a competitive and resilient financial services sector2, highlights the importance of the funds industry to Ireland and makes a number of recommendations including the following in respect of private assets:
(1) the Central Bank should review its AIF Rulebook and
associated requirements that impact on the establishment of private
asset funds in Ireland; and
(2) a package of measures should be taken forward to improve the
attractiveness of the ILP. This should include consideration of how
the participation exemption could support the use of ILPs and a
review of the scope of the dividend withholding tax exemption.
As noted above, the Central Bank has in recent years made a number of helpful improvements to its AIF Rulebook, AIFMD Q&A and related guidance for private funds. The Central Bank has communicated to industry that it is currently reviewing its AIF Rulebook, updating it for changes which will be required by Directive 2024/927/EU (AIFMD II) and it is engaging with industry on other changes which may be made to further enhance Ireland's private fund offering. The Central Bank has indicated its intention to publish a consultation on the revised AIF Rulebook in H1 2025.
In terms of other opportunities for Ireland, the exponential growth of private credit as an asset class globally has been well documented. As noted above, Ireland has had particular success with credit funds and it is expected that the number of credit funds domiciled in Ireland will continue to grow. The implementation of AIFMD II (which provides for a harmonised loan origination regime at EU level) will level the playing field for Ireland which already has a domestic "L-QIAIF" regime in place for loan originating funds. The Central Bank has confirmed that it remains committed to harmonising its loan origination rules with those of AIFMD II. This is positive for managers seeking to establish funds in Ireland which engage in loan origination.
Another key point highlighted in the 2030 Report is that measures are required to improve the participation of retail investors in the capital markets. As noted above, the introduction of the ELTIF was a significant step forward to enable the participation of retail investors in private investment funds. Ireland has an established retail investor AIF or (RIAIF) regime for AIFs offered to retail investors. The Central Bank has indicated more recently that it is open to considering further changes to its RIAIF regime.
On the tax side, as noted above, the Finance Act 2024 introduced a participation exemption which provides a participation exemption for foreign dividends and distributions. This is extremely beneficial for ILPs, further increasing their competitiveness. Further, a review of the scope of the dividend withholding exemption is expected for ILPs building on the recommendations in the 2030 Report.
Conclusion
There is no doubt that private assets will continue to grow globally. Ireland is well placed to increase its share of the private assets market with significant work being done at both governmental and regulatory level to ensure that Ireland has the products in place to attract and retain global asset managers seeking to establish private asset funds. In addition, the further harmonisation of rules at EU level (e.g. ELTIF 2.0 and AIFMD II) helps to ensure that Ireland is on a level playing field with the rest of Europe. This, together with Ireland's track record as a funds jurisdiction, is very encouraging and lays the groundwork for the next stage in Ireland's journey as a global funds jurisdiction.
Footnotes
1. "Funds Sector 2030: A Framework for Open, Resilient and Developing Markets", Department of Finance, October 2024, page 18.
2. The government's commitment to maintaining Ireland as an attractive and competitive location for business has recently been reaffirmed by the announcement in April 2025 of the government's approval to accelerate the development of a new whole-of-government Action Plan on Competitiveness and Productivity, alongside a suite of immediate measures designed to bolster business resilience and support competitiveness.
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