Since the first Irish UCITS was launched in 1989, and the first Irish QIF in 1990, Ireland has stood out as one of the major regulated fund domiciles in Europe, rewarding a well coordinated effort to develop and grow the industry. Ireland is a key jurisdiction for UCITS funds and AIFs, and increasingly ETFs and money market funds. It also hosts a huge service provider community of administrators, custodians, depositaries, and others, servicing non-Irish funds, such as Cayman funds. Assets managed by just over 7,000 Irish-domiciled funds surpassed EUR 2.5 trillion, as of July 2018, while assets under administration (both Irish and non-Irish domiciled) have hit a new high of EUR 4.9 trillion, as of June 2018, according to Irish Funds, the industry association. Ireland also aspires to become a more attractive private equity domicile, and to that end expects to introduce a new Investment Limited Partnership Act in 2019.
It therefore seems like a natural decision for Simmons & Simmons to have opened its own office in Dublin, subsequent to working in partnership with other law firms in Ireland. The Dublin office is part of Simmons & Simmons’ globetrotting business plan, which has seen its footprint expand to 22 offices in 19 countries, including Singapore, Munich and Luxembourg over the past five years. In addition it has worked in alliance with Seward & Kissel in the US since 2012. “We have a systematic process of increasing presence, and Dublin was next on the list. We build a presence where clients demand they need support or help,” says Asset Management & Investment Funds Lead, Waheed Aslam.
The Dublin office is part of Simmons & Simmons’ globetrotting business plan, which has seen its footprint expand to 22 offices in 19 countries, including Singapore, Munich and Luxembourg over the past five years.
From the outset, Simmons & Simmons’ leadership – Richard Perry, Head of Financial Services, and Colin Leaver, Head of Asset Management & Investment Funds (AMIF) – had been integrally involved in deciding when and how to open the Dublin office, and are overseeing its launch and development. London partner, Devarshi Saksena, is spending time in Dublin on a regular basis, to integrate its culture and ethos with the rest of the firm’s global financial services and hedge fund teams.
The plan is to grow the Dublin office to 10 partners and 30 associates over the next three years, including banking, capital markets, corporate and tax capabilities. The firm has successfully recruited, and continues to do so, in the Irish market in the funds and regulatory sector, as well as in these other sectors. Some non-Irish practising lawyers, including UK-qualified solicitors, are registering with the Law Society of Ireland, which may widen the pool of candidates. The company’s growth strategy has historically been organic.
The office adds to Simmons & Simmons’ AMIF and Financial Institutions, sectors (but not its Life Sciences, or Technology, Media and Telecoms sectors). The range of advice offered will include fund formation and fund advisory work, covering the full spectrum of asset management, including: UCITS, QIAIF and RIAIF products targeted at retail and sophisticated investors; L-QIAIFs, and closed-ended private fund structures in various legal forms including ICAVs; Investment Limited Partnerships, PLCs, CCFs and Unit Trusts; as well as managed accounts, managed account platforms, ETFs and money market funds. Additionally, the Ireland office will advise on EU rules such as EMIR, SFTR, MiFID 2 implementation, PRIIPs and GDPR.
The Dublin office is led by Fionán Breathnach, who joined in March 2018, and was formerly head of the investment funds and financial regulatory practice at Irish law firm Mason Hayes & Curran. He brings 23 years’ Irish financial services experience. The second and third partner hires are Elaine Keane and Niamh Ryan, who joined in July 2018, having previously been partners at A&L Goodbody, where Ryan had headed the London office between 2014 and 2018. Keane has over 14 years’ experience, and Ryan over 17 years’ experience as funds lawyers. During the course of her career, Keane has advised several investment banks including Barclays, Credit Suisse, UBS, Deutsche Bank, Nomura and Morgan Stanley, asset managers including Wellington and Value Partners, hedge fund managers including Cantab Capital, Winton, Aspect Capital and Marshall Wace and ETF providers Source, UBS, VanEck and Credit Suisse. Over the course of her career, Ryan has advised a range of clients from institutional type clients such as HSBC, Aberdeen Standard Life, Aviva and Schroders to managers such as Blackstone, King Street and Cheyne Capital on their Irish fund ranges. Keane and Ryan were recognised in The Hedge Fund Journal’s 2018 “50 Leading Women in Hedge Funds” survey, in association with EY. Various editions of the survey have also featured women working for most of the aforementioned firms.
Ryan was attracted to the role because, “Our network of offices in Europe and Asia and alliance with Seward & Kissel in the US is a real differentiator. We can just pick up the phone to check out the US or Luxembourg tax position. We have very strong relationships with Cayman firms as well.” Keane was lured to the job at Simmons because she is well aware, “it is an opportunity that does not come around often. As a global firm, Simmons & Simmons can pick up information and market intelligence from across the network, and clients can benefit from our multi-jurisdictional approach. I am absolutely thrilled and the model is already bearing fruit”. The Irish lawyers work closely with the firm’s international network, particularly with offices based in the UK, Luxembourg, The Netherlands, Frankfurt, Paris, Dubai, Hong Kong and Singapore.
Keane has extensive experience of setting up ETFs. Trend-following apart, very few hedge fund strategies have so far been wrapped in ETFs, and Keane identifies several reasons, “whereas UCITS can delay portfolio transparency, ETFs need to offer it daily. Intraday rebalancing and replication is also an issue. Hedge fund ETFs are more likely to be structured through synthetic replication and the market favours physical replication. And psychologically, ETFs are perceived as passive, index products”. Still, “we would love to see ETFs develop more innovative solutions to accommodate hedge fund strategies” she continues. This September, the SEC has proposed that US-listed ETFs could be relieved of the need to publish intraday NAVs, every 15 seconds, and simply publish end of day NAVs, as many listed closed end funds do. The SEC has invited comments on this proposal.
Simmons & Simmons’ LaunchPlus guidance for new fund manager launches has been expanded to consider Brexit scenarios. Some asset managers have established, or increased, their presence in Ireland as an EU hub, as part of their Brexit plans. “Ireland’s financial regulator, the Central Bank of Ireland, has a special unit looking at applications for regulated status, and is becoming more familiar with firms’ expectations,” says Ryan. “As setting up your own management company can typically take six months or so, some managers are looking at third party platforms that might take around three months to agree terms and update documentation – especially as we still do not have any real clarity on Brexit, and may not get any by March 2019,” she continues. In addition to this, “A third-party solution can also make sense for managers who are too small to set up their own entity”.
Ireland’s relationship spokes radiate worldwide. According to Keane, “UK fund promoters already account for 60-70% of fund promoters in Ireland. Our Hong Kong and Singapore offices are also a good source of introductions for Asian managers looking to set up a UCITS. Ireland appeals to US managers due to the common language, common law legal system and a work ethic that fits in well with the US”.
“The flexible ICAV structure introduced in 2015 – which can be an AIF or a UCITS – is the vehicle of choice for any manager setting up an Irish fund,” says Ryan. The liberalisation of rules now allowing regulated credit and lending funds (L-QIAIFs) to do direct lending – previously only possible in unregulated vehicles – also taps into demand for alternative credit.