Irish Central Bank Issues Proposed Rules to Enable Private Funds to Originate Loans

Hedge funds domiciled in Ireland are often organized as Qualifying Investor Alternative Investment Funds.  See “Considerations for Launching Qualified Investor Funds in Ireland: An Interview with Pat Lardner, Chief Executive of the Irish Funds Industry Association,” Hedge Fund Law Report, Vol. 5, No. 31 (Aug. 9, 2012).  Such funds have been prohibited from originating loans.  The Central Bank of Ireland, which regulates such funds, recently proposed rules that would permit such funds to originate loans and has solicited stakeholder comments on those rules.  The so-called Loan Originating Qualifying Investor Alternative Investment Funds would be permitted to originate loans under certain stringent conditions, including that the fund be closed-ended and that lending be its sole business activity.  See also “Allen & Overy Report Suggests that Pressure from New Regulations on Bank Lending May Create Additional Opportunities for Hedge Funds and Other Non-Bank Sources of Capital,” Hedge Fund Law Report, Vol. 5, No. 48 (Dec. 20, 2012).  This article provides a detailed discussion of the Central Bank’s proposed rules on lending by private funds, and includes context and market color from Andrew Bates, a partner in Dublin-based Dillon Eustace.

To read the full article

Continue reading your article with a HFLR subscription.