So I was passed on the slides from a major Cayman law firm's investment funds seminar held in Dublin during the week.
Gareth Murphy, head of supervision from the Central bank was kind enough to lend himself to the Cayman law firm and he provided some interesting facts, and reminded us of some things we should be doing.
First, he informed the audience that there are expected to be 85 authorised AIFM's in Ireland by June 22nd 2014, 21 of which will be Internally Managed, and the remainder, 64 externally managed.
This was interesting from a number of angles:
First, Luxembourg were at pains to let us know that of the 200 applications they have recevied, there was 1 Internally managed AIF authorised to date and perhaps 1 more expected out of the 200. We know Luxembourg have encouraged the manco model in Luxembourg and between the chapter 15 and chapter 16 manco's they have approved over 350 of them on the introduction of AIFMD.
Luxembourg did allow SIF's internally manage, but the CSSF & ALFI must be commended for persuading the industry to move to a manco model.
Second, the AIC in the UK, (the Association of Investement Companies) are the main representation industry body looking after the interests of the internally managed AIF. The Investement Trust industry industry, around since 1868, is the classic fund vehicle, in some cases with employees, in most cases without and with a board who run the entity.
Thirdly, with Ireland having over 500 QIF's , only 21 of them opting to become Internally Managed is interesting. Working with UK managers with QIF's in Ireland, there were managers who felt that it was not credible for them to have the Irish entity internally manage, when the UK entity may be expected to be the AIFM. A reasonable number of the QIF's in Ireland have or will appoint another entity as an AIFM and this is being borne out by the numbers.
We in RiskSystem are working with a number of prospective Internally Managed AIF's. Of the 14 AIFM's to date, 2 have been internally managed, 1 a fund of hedge funds and the other a property fund.
Which means there are 19 others remaining.
We do know the identity of one of these 19 as a large Curacao based fund listed on a European exchange is re-domiciling into Ireland and becoming self managed.
Getting back to Gareth from the Central Bank and in his presentation he mentioned the 4 key issues for
governance, control, capacity, capability, and conflicts .
One final thought is that I personally think that the internally managed AIF's in Ireland should thread carefully when looking at their Boards and their risk service providers. Having directors who are also affiliated with AIFM's and are also involved in the boards of Internally Managed AIF's is fraught with conflicts and performing balancing acts. We think it is much better if those Internally managed AIF's outsource their risk management to a truely independent entity, who has sound and reliable data, is free from conflicts, who can control the data and manage the relationship with the Investment manager when discussing risk management and has the expertise in the area.
We are RiskSystem believe we tick all the boxes to be a compelling service provider into those Internally Managed AIF's and are happy to discuss any of the items in this post.
