On 25th November, the Central Bank of Ireland (CBI) announced a welcome change to their requirements for Loan Originating Qualifying Investor Alternative Investment Funds (LQIAIFs) which will take effect from 3rd January 2017.
Details of the change
Notwithstanding the huge economic, industry and investor appetite for direct lending funds, there has to date been limited use of the Irish LQIAIF product which came into existence in mid-2014. The reason for this is what many perceived to be overly restrictive rules which were placed on the manager of such products. For example managers of Irish direct lending funds were obliged to limit their operations to the business of issuing loans, participating in loans, participating in lending and to operations directly arising therefrom, to the exclusion of all other commercial business.
The Central Bank has now confirmed that LQIAIFs will be entitled to invest in debt and equity securities of entities or groups to which the LQIAIF lends. In addition, debt and equity securities may be held for treasury, cash management or hedging purposes. These are key changes that will make the product more user friendly for international investment managers who wish to originate loans and raise capital through an Irish regulated investment fund.
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