February 2017 globalfund www.globalfundmedia.commediaspecial report Ireland Alternative Investment Fund Services 2017

Positioning to Service providers Multiple growth be the European adopt client drivers boost RegTech leader partnership path funds industry CONTENTS In this issue…

03 Ireland: Positioning to be the European RegTech leader By James Williams

06 Forging closer links with clients Interview with Linda Gorman, Quintillion

09 Moving towards the paperless office Interview with John Bohan, Apex Fund Services

12 ML Capital evolves fund solutions offering Interview with Cyril Delamare, ML Capital

13 Multiple growth drivers boost Ireland’s Funds Industry By James Williams

16 A ‘KURE’ for regulatory fatigue By Ras Sipko, KOGER USA

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Managing Editor: James Williams, [email protected] Managing Editor (Wealth Adviser, etfexpress & AlphaQ): Beverly Chandler, beverly.chandler@ globalfundmedia.com; Online News Editor: Mark Kitchen, [email protected] Deputy Online News Editor: Emily Perryman, [email protected] Graphic Design: Siobhan Brownlow, [email protected] Sales Managers: Simon Broch, [email protected]; Malcolm Dunn, [email protected]; Sales Manager (Private Equity Wire & Property Funds World): Christine Gill, [email protected] Marketing Administrator: Marion Fullerton, [email protected] Head of Events: Katie Gopal, [email protected] Head of Awards Research: Mary Gopalan, [email protected] Chief Operating Officer: Oliver Bradley, [email protected] Chairman & Publisher: Sunil Gopalan, [email protected] Photographs: Courtesy of IFSC; Failte Ireland Published by: GFM Ltd, Floor One, Liberation Station, St Helier, Jersey JE2 3AS, Channel Islands Tel: +44 (0)1534 719780 Website: www.globalfundmedia.com ©Copyright 2017 GFM Ltd. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the publisher. Investment Warning: The information provided in this publication should not form the sole basis of any investment decision. No investment decision should be made in relation to any of the information provided other than on the advice of a professional financial advisor. Past performance is no guarantee of future results. The value and income derived from investments can go down as well as up.

IRELAND GFM Special Report Feb 2017 www.globalfundmedia.com | 2 OVERVIEW

Ireland: Positioning to be the European RegTech leader By James Williams

Dublin’s International Financial Services FundCalcs service all parts of the financial Centre (IFSC) employs over 38,000 people services domain. This reflects the commitment and is home to some of the world’s leading that Ireland has to ‘FinTech’ and is very financial institutions; industry stalwarts such much at the heart of the Irish Government, as Merrill Lynch, ABN Amro, JP Morgan. as is evidenced by its IFS2020 strategy for But in recent years, this area of has International Financial Services, which aims ushered in a slew of technology companies, to create 10,000 new jobs in the IFS sector many of them exciting start-ups specialising (largely through supporting FinTech) by 2020. in financial technology. Alongside the likes Within FinTech, one clear trend in Dublin of , , LinkedIn and , all is the emergence of technology companies of whom have their European headquarters that aim to address the regulatory and located here, a number of interesting start- compliance challenge facing all parties ups have sprouted up, causing some to dub in financial services. These ‘RegTech’ this area ‘Silicon Docks’. companies are being established by silver Firms such as Propertygate and Certus foxes; people with many years’ experience in (portfolio management), CR2, Acquirer the industry and a deep understanding of the Systems, CurrencyFair, FINCAD and operational challenges.

IRELAND GFM Special Report Feb 2017 www.globalfundmedia.com | 3 OVERVIEW

“There are at least 10 such companies in “If you talk to any of our clients Dublin with strong capabilities. For example: Silverfinch, FundApps, FundRecs and and ask them what their pain TradeFlow,” says Cillian Leonowicz, Senior points are, regulation is going Manager Consulting and Deloitte Ireland to be in the top three. For our FinTech Lead. Silverfinch creates connectivity between clients, it is a real pain that asset managers and insurers through a fund they are looking to overcome.” data utility, FundRecs offers reconciliation Lory Kehoe, Deloitte software while TradeFlow provides data tracking and risk alert technology capabilities. The drive for transparency continues “Based on recent research we did around apace within the hedge fund industry, FinTech, what we found is that there is a which just recently saw the US billion dollar niche core of companies in Ireland focusing manager Platinum Partners face allegations on RegTech. The bottom line is if you talk to of fraud. any of our clients and ask them what their “There was a reliance on third party pain points are, regulation is going to be in pricing, which wasn’t properly investigated, the top three. For our clients, it is a real pain the brokerage reports weren’t investigated. that they are looking to overcome,” notes Mr Trump is talking about having a lighter Lory Kehoe, Director Consulting and Deloitte touch regulation to promote the US financial EMEA Blockchain Lab Lead. services industry but that simply isn’t The requirement for stronger data plausible if they want to properly regulate management in terms of having a central the industry,” says John Bohan, Managing pool of data that one can slice and dice is Director – Europe, Apex Fund Services, who becoming critical because global regulators says that managers want to use their fund are increasing the regulatory burden and administrator as more of a one-stop shop. changing the requirements. This is not about “If they’ve got a number of hedge funds, to reverse any time soon. private equity funds domiciled in various One particular solution that could well end jurisdictions with a mixture of US and non- up becoming the primary container for data US investors they need to be able to extract to do the slicing and dicing is Blockchain. relevant data to perform K1 calculations Deloitte has just selected Dublin as the on tax, risk reporting for internal purposes base for the creation of an EMEA Financial and for external client purposes, etc. That Services Blockchain Lab as part of its automatically becomes a high demand FinTech initiative ‘The Grid’. A 50-person for an administrator unless they’ve got team will focus on developing strategic the technology to meet that demand,” blockchain capabilities and proof-of-concepts observes Bohan. into functioning prototypes to create “We’ve over 1,400 funds across the Apex ‘ready to integrate’ solutions for financial group globally. We know that 18 per cent of services clients. those funds are PE and RE funds. We also “One of the best uses of this technology know from our opportunity pipeline using is being able to change the back-end that the next six to nine months reporting requirement when it is in the core shows a much higher percentage of PERE blockchain; once it is changed, it is changed funds so we can see what investment for the entire industry. We are currently strategies are proving popular with investors exploring how blockchain can be used as a right now and what might be coming around container for data which can then be sliced the corner. and diced for current and future regulatory “Based on this level of information we requirements,” says Kehoe. can develop stickier client relationship and Moreover, the information being logged generate fees from regulated as well as in the blockchain is immutable. It can’t be unregulated funds,” he adds. changed and this therefore has the potential Asked how important it is for asset to drastically improve transparency. servicers to have access to a thriving 7

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Ken Somerville [email protected] +353 1 523 8003 quintillion.com QUINTILLION Forging closer links with clients Interview with Linda Gorman Alternative fund managers have had a myriad becoming individual clients of those of regulatory change to contend with over technology firms, service providers including recent years. In the early stages, many chose Quintillion have become the clients to those to take on the reporting burden themselves. technology firms on a more wholesale basis. This was very much a learning curve. “We administer approximately 160 alternative However, as the complexity of regulatory funds and deploy technology across all of compliance has increased, fund managers them, as opposed to a manager who might have looked to consider how much they use the technology for a handful of investment want to handle internally versus how much funds. Regardless of whether it is AIFMD, they want to outsource. FATCA, CRS or EMIR, our IT infrastructure is “We now see a significant amount of designed to take full advantage of the software Linda Gorman, CEO of fund managers choosing to outsource Quintillion Limited providers we partner with.” their regulatory requirements,” says Linda This need to provide comprehensive Gorman, CEO of Quintillion Limited, a regulatory reporting support to fund European-based affiliate of U.S. Bancorp managers has led to an operational shift Fund Services. “Essentially everyone has at Quintillion. It has become more of a come to the conclusion that this is one centralised database management approach set of data used in different ways for to reporting, says Somerville. “Due to the different regulatory requirements. In a lot of fact that we are providing comprehensive instances, that process is quite fragmented reporting for a broad range of clients and as managers’ businesses have grown and strategies, we manage all of our output at evolved over time.” the database level. Gorman explains that at the beginning of “Having had managers experience first- 2016, Quintillion decided from a product and hand the onerous nature of doing regulatory strategy perspective to put a dedicated team reporting on a piecemeal basis, the together to bring a best-in-class solution to marketplace has taken a 180-degree turn and the market. we are now the licensees of software and “We are currently working through an have operations staff who are fully dedicated RFP process with both established and to the role of regulatory reporting,” outlines emerging technology providers to find the Somerville. best solution to offer the broadest range of This in turn has helped to forge closer regulatory reporting to our clients. As part partnerships. “We want to understand what of that process, we are looking a broad our clients’ challenges are currently, and range of providers who have a strong open work with them to help ensure we create the architecture underpinning their service right solution(s) based on the fact that we offering,” says Gorman. already have so much of their fund data in Quintillion, and indeed U.S. Bancorp our systems. Fund Services as a whole, are talking to “It’s all part of the wider trend to push technology providers who previously might outsourcing from managers to their have been licensed by investment managers service providers. They are feeling the fee to supplement their internal operational compressions and regulatory pressures, so resources. What has changed, says Ken where we can remove some of that burden Somerville, Head of Business Development our clients are receptive to that and we have at Quintillion is “that rather than managers the tools to do so,” concludes Gorman. n

IRELAND GFM Special Report Feb 2017 www.globalfundmedia.com | 6 OVERVIEW

4 fintech/regtech ecosystem in Dublin, Bohan “The solution that fund asserts that it is “essential” that service providers utilise innovative fintech brands “as administrators need to offer new technologies continue to drive industry to the marketplace should progression and in turn influence client be flexible enough to allow expectations”. He thinks that Ireland has the capacity to for the manager’s own risk become Europe’s leading RegTech jurisdiction appetite.” given that has already established itself as the Linda Gorman, Quintillion largest centre for fund administration globally with over 43 per cent of the world’s hedge funds administered there. but for others it is a hybrid approach “The growth of the ‘Super Management where they ask us to do a lot of the data Company’ has fuelled greater demand for preparation before they make the filing(s),” risk and/or OMS/PMS technology as well says Linda Gorman, CEO of Quintillion. as the back office end. With so much new One of Dublin’s leading RegTech business, on both the client and service companies is AQMetrics. The firm’s provider sides, invariably the environment CEO, Geraldine Gibson, served on becomes a rich financial services centre the management team of the risk and with multiple fintech businesses feeding and compliance software company Norkom fuelling that growth,” says Bohan. before it was acquired by BAE Systems in Another service provider paying close 2011. Before AQMetrics was established in attention to Ireland’s RegTech revolution and 2012, Gibson served as Head of Professional the opportunities that could arise to enhance Services at BAE Systems. their operating model is Quintillion, a Discussing Ireland’s RegTech ecosystem, subsidiary of US Bancorp Fund Services. Ken Gibson has a slightly more established Somerville, Head of Business Development viewpoint. She points out that 10 years ago, at Quintillion, says that by virtue of AIFMD people didn’t refer to software companies and other global regulation, managers that provided regulatory risk and compliance have been faced with a slew of reporting solutions as ‘RegTech’ companies, though requirements, such that it has become that is exactly what they were. operationally onerous; it has taken on a life Given the Brexit decision last June, Gibson of itself. thinks this is causing people in Ireland “As each of the reporting agencies have to look at how Ireland is positioned as a dictated or defined their reporting criteria, financial services jurisdiction to service managers have put in a lot of effort to the globe. “For RegTech companies, there construct solutions and get themselves probably are more opportunities for them. in a position where they are equipped to In the end, there will be more regulation. understand the content of those reports. It is not going to disappear. Everybody It has been a rationalisation process, is looking for automation, everybody is which has led to a shift from manager-led looking for efficiency and that in itself brings responsibility to more of a collaborative opportunities for RegTech,” she adds. responsibility,” says Somerville. To that end, one of the most challenging The inference here is that as managers pieces of regulation set to impact market increasingly outsource regulatory and participants is MiFID II (Markets in Financial compliance tasks, it is the fund administrator Instruments Directive II), set to be introduced rather than their own fund management in January 2018. companies that end up becoming the This January, AQMetrics announced that licensees of software providers. it had made new enhancements to its end- “The solution that fund administrators to-end risk and compliance solution, which need to offer to the marketplace should be sits on the AQMetrics cloud-based platform. flexible enough to allow for the manager’s These enhancements will help both buy-side own risk appetite. Some managers want and sell-side firms better prepare for MiFID II complete outsourcing of regulatory reporting and include the following: 10

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The Irish Government is keen to embrace efficient way. Utilising fintech solutions to the FinTech revolution as is evidenced by its deliver accurate and instant tracking and IFS2020 strategy for International Financial reporting, whether it be on the tax side Services, which aims to create 10,000 new (FATCA, CRS), the risk reporting side, or jobs in the IFS sector by 2020. the regulatory reporting side (Form PF and One particular area of innovation Annex IV), is becoming essential in the underway in Ireland is the emergence of current fund environment. Service providers regulatory technology or ‘RegTech’ with a need to employ these technologies to plethora of start-ups now operating out of remain competitive and deliver the levels of Dublin. Part of the reason for this is that responsiveness and support expected by sell-side institutions and fund management John Bohan, Managing managers”. groups, burdened by the weight of regulation, Director – Europe, Apex Fund The Apex Ireland offices are currently in regard outsourcing as an attractive option Services the process of becoming paperless, such is because regulatory operations are effectively the level of automation they are introducing a non-competitive differentiator. to their operating model. The Apex group This thriving technology ecosystem is as a whole is working toward calculating all benefiting Ireland’s service providers such as fund NAVs online and in PDF format, with Apex Fund Services, which has two of its 33 Bohan confirming that they are also looking offices situated locally and a total group AuA at introducing auto-reconciliation technology of USD45 billion globally. “across the majority of funds”. “Currently Apex is listed as one of the “At each of Apex’s 23 operational centres top 20 largest administrators globally but around the world the staff will see, when we are looking to break in to the top 10 they come into work, that their client’s over the next few years and ultimately portfolio has already priced overnight, become the single largest independently properly reconciled and any transfer agency owned fund administrator. We think there activity already input. are M&A opportunities that could provide “The construction of a NAV for clients good synergies with respect to regulation used to be like producing an audit file yet as technology and reconciliation technology,” the industry has evolved, with respect to the explains John Bohan, Managing Director – squeeze on fees and demands on clients Europe, Apex Fund Services. for additional reporting, a firm’s survival is Bohan believes that unless fund dependent on embracing technology; for administrators heavily invest in the right fund administrators it means generating technology and systems they will not be at paperless NAV’s that are auto-reconciled, the races and will lose market share. reducing the time needed to put together “Unless administrators employ robust a full NAV file, or using spreadsheets to processes, from a technology perspective, print off brokerage reports, etc. Those who for taking data and repackaging it into the continue doing that will likely not survive,” correct format, they risk losing out on the asserts Bohan. inevitable revenue stream it presents,” says Once Apex has completed rolling out its Bohan, adding: paperless office across the group, the ability “It is important that the multitudes of to fully automate the NAV production should HNW investors out there are tracked in an help improve its business margins. n

IRELAND GFM Special Report Feb 2017 www.globalfundmedia.com | 9 OVERVIEW

7 • An updated Supervisory Control Portal “The reality is, the FinTech and Risk Register to provide client classification and product appropriateness companies operating in factors and scoring; Ireland, in many instances, • Additional Risk Monitoring analytics to have more value to offer the cater to Best Execution and Transaction Cost Analysis (TCA) asset servicers than vice- • A new regulatory reporting solution versa.” whereby AQMetrics is authorised as an Cillian Leonowicz, Deloitte ARM (Approved Reporting Mechanism) under MiFID II. AQMetrics is currently reviewing several MDP (Market Data into their business and improve things. Processor) specifications from National Going forward, the challenge for Ireland’s Competent Authorities to enable RegTech community is going to be how passporting of MiFID II regulatory they develop effective partnerships with the reporting into all European Regulators. traditional asset servicer names listed at the Claire Savage, COO of AQMetrics, notes: start of this editorial. “Where we resonate – based on my “How will a global asset servicer embrace discussions with prospective clients – is the different culture of working with start- we aren’t just selling an interface into a ups and partner with them on a level that reporting system. We have a lot of deep doesn’t come across as the big boy bullying regulatory knowledge and this is all built into the small guy? The reality is, the FinTech the platform. We can talk about MiFID II as companies operating in Ireland, in many a whole to the client and ask, for example, instances, have more value to offer the asset how they manage the process when a client servicers than vice-versa because they have, changes from retail to professional. We listen or are developing, specific solutions to the to their manual processes, understand what regulatory and operational challenges that their challenges are, and then explain to fund administrators, etc, are looking to solve. them how it can be automated, controlled The trick is finding the balance and parity of and audited to bring them in line with esteem between the two for problem solving regulation.” and value creation that sticks. In this regard, technology is just the “It’s an interesting dynamic in Ireland right enabler. It shows a client how it could slot now,” concludes Leonowicz. n

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1532 ML Capital-Advert (A4 Portrait)-V2.indd 1 05/11/2014 5:27PM ML CAPITAL ML Capital evolves fund solutions offering Interview with Cyril Delamare ML Capital, one of Ireland’s leading can you assist with the launch process?’ If management company groups, has grown the manager has a particular set of service to exceed EUR3 billion of AUM over the last provider requirements and sufficiently large 12 months. The growth trajectory over recent seed capital we will typically set up a years has enabled ML Capital to evolve from standalone fund structure but if the seed being a leading UCITS platform operator to capital is on the lower side, we will onboard being more of a fund solutions provider to them onto one of our platforms. managers and investors alike. “It’s been an interesting evolution going “They come to us, tell us what they need from the self-managed MontLake UCITS and and we give them the best fund structure MontLake QIAIF model to one where today we and solution; whether this is going on to one act as a super management company (‘MLC Cyril Delamare, CEO of of our platforms and launching a sub-fund ML Capital Management’). We believe that going forward, and using us as the third party ManCo to management company-led fund structures will perform all the operational and compliance be the way to go. We don’t believe that the old tasks and helping with distribution, or setting self-managed fund model will work in the next up standalone funds. We have developed few years,” says Delamare. a series of solutions and segmented the Delamare says that in terms of QIAIF offering for managers,” says Cyril Delamare, launches last year, they were typically in the CEO of ML Capital. arbitrage world and in the CTA/macro world. ML Capital operates two platforms: “That is the result of investors focusing MontLake QIAIF and MontLake UCITS. Both on trying to find hedge funds that can avail of the Irish ICAV structure, the latter complement their long-only exposure. being UCITS V-compliant. Investors last year were really focused on Delamare says that both platforms grew managers running less directional strategies. in 2016. “Both have recorded net inflows There was also strong demand in the hard and have launched new sub-funds. The asset space. We’ve also seen private debt ICAV is proving to be a really good format. funds launch; we launched a multi-strategy It has modernised the Irish fund structures private debt fund a few months ago, for available to managers,” remarks Delamare. example. “Much of our demand for European “Investors like these strategies as it gives regulated funds has been investor- them a way to reduce their exposure to driven, something we believe to be a sovereign and government bonds but they real differentiator. An investor will have are still only a small slither of their overall discussions with a fund manager and agree fixed income exposure,” says Delamare. to invest with them but only on the basis Both managers and investors expect that they have a properly regulated and more from management companies today; appropriately managed fund structure.” they want excellent client service, reporting, This, says Delamare, is pushing the Irish distribution, active oversight on the products, fund model away from self-managed fund etc. That is exactly what ML Capital brings structures to management company-led to the table. It is no longer good enough to structures where ML Capital will act as the simply be the fiduciary. appointed Management Company. “We are very active with our fund manager “Oftentimes, an investor will come to us and investor clients. We are the link between and say, ‘We want to launch this manager, both parties,” concludes Delamare. n

IRELAND GFM Special Report Feb 2017 www.globalfundmedia.com | 12 INDUSTRY

Multiple growth drivers boost Ireland’s Funds Industry By James Williams

There are a number of encouraging Director of Business Development, Irish developments in Ireland that would, on Funds (the Irish Funds Industry Association). the surface, appear to place it on a strong “The ICAV is well regarded by global asset footing to further enhance its reputation as managers and generally accepted as the Europe’s leading onshore alternative funds legal structure of choice for new corporate jurisdiction. fund structures,” he adds. If one looks at fund growth, through The ICAV appears to be used October 2016 (the most recent figures at proportionately more by investment the time of writing) the aggregate AUM of managers launching QIAIFs, which is Irish QIAIFs increased by 7 per cent with probably a function of more corporate AIFs net sales reaching EUR10 billion. At the being established. The ICAV also makes it end of 2015, total assets in Irish ICAV fund easier to set up master feeder structures that structures stood at EUR6.2 billion. By the are more common in AIFs than UCITS. This end of October 2016, that figure had risen to is a trend that Fox expects to continue for EUR26.5 billion. the foreseeable future. “The ICAV also recorded strong net sales. As more investment managers choose to In the 11 months through to November 2016, adopt the ICAV to use as a platform facility, there were net sales of EUR16 billion into this could result in the overall number of ICAVs, split between QIAIFs and UCITS; the QIAIFs springboarding over the next year former had EUR8.9 billion in net sales, the or two. Kepler Partners, Old Mutual Global latter EUR7.1 billion,” confirms Kieran Fox, Investors, Legal & General Investment

IRELAND GFM Special Report Feb 2017 www.globalfundmedia.com | 13 INDUSTRY

Management, OppenheimerFunds and “The ICAV is well regarded EnTrustPermal have all established ICAV platforms over the last 12 months to launch by global asset managers multiple fund offerings. and generally accepted as “The ICAV is flexible and can be used for the legal structure of choice any strategy type. There is no reason why any particular fund structure couldn’t use an for new corporate fund ICAV. It can be used for any type of product structures.” range or asset class,” states Fox. Kieran Fox, Irish Funds Industry Donnacha O’Connor is Partner at Dillon Association Eustace, one of Ireland’s leading law firms. In his view, the ICAV has become “more than the sum of its parts”. that the ICAV is very much part of Ireland’s “The ICAV has technical advantages over growth story. other corporate fund structures in that it can “Nowadays, both across the hedge fund ‘check the box’ for US federal income tax and the UCITS world, it is really the default purposes, it can produce separate financial structure for a fund. Unless there is a statements for its sub-fund and it is subject specific reason why someone might want a to a tailored piece of funds legislation, rather unit trust or limited partnership or a common than general company law and so on. The contractual fund, they would choose the ICAV is also popular with managers and ICAV. It has replaced the Irish Plc, which distributors because it’s easy to understand had been used for a long time and worked it as the Irish SICAV or the Irish OEIC fine but the ICAV does the same things, only and it has become a marketable brand,” better. We haven’t set up a Plc for at least a comments O’Connor. year,” says Lovegrove. Ken Somerville, Head of Business He says that one particular area of Development at Quintillion Limited, a business that has proven busy in the last 12 European-based affiliate of U.S. Bancorp months is in relation to fund platforms. Fund Services, believes that the ICAV has “We have a number of clients that run emerged as a key growth driver for Ireland multi-manager platforms using the ICAV. and has “become the go-to solution for It allows for a much easier entry point investment managers establishing funds in for smaller managers looking to come Europe, and in particular those in the CLO onshore for the first time; these platforms space who are branching out into funds. provide a very simple solution for all of “That has been a real advantage within their compliance and regulatory needs,” U.S. Bancorp because it has allowed us explains Lovegrove. deploy the combined services of fund and One management company that has loan administration. This has been a really decided to use the ICAV for both its UCITS positive development for Ireland and the and AIFMD platforms is ML Capital, who asset servicing community,” says Somerville. now operate as a Super ManCo. Looking This is being further supported by a ahead, the fact that it also has a MiFID growing trend of established fund managers license could work in its favour as UK-based choosing to add an Irish regulated fund fund managers face uncertainty over AIFMD product to their fund stable. “They are passporting rights as a result of Brexit. looking for something to run alongside their “We are probably one of the only providers offshore Cayman master/feeder structure, in Dublin that offers a Super ManCo solution for example. The ICAV is attractive to for UCITS and AIFMD as well as holding a alternative fund managers who perhaps MiFID license. Having these licenses enables want a regulated fund product within their us to act as the investment manager to a traditionally offshore product range,” adds number of fund structures with discretion and Linda Gorman, CEO of Quintillion. will allow us to respond to what managers Philip Lovegrove is a partner in law may need in the future. firm Matheson’s Asset Management and “I would say that we have active Investment Funds Group. He is in no doubt discussions with UK fund managers whereby 17

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For more information, contact Koger at [email protected], or at +1-201-291-7747 in USA, at +353-1-476-4120 in Europe and +612-9299-3161 in Australia or visit our website at www.kogerusa.com KOGER USA A ‘KURE’ for regulatory fatigue By Ras Sipko For the past four years, alternative fund managers with KURE is able to increase efficiency by offering: US investors have been coming to terms with the far- • Complete tracking of underlying investments and reaching effects of the Foreign Account Tax Compliance beneficial owners, in even the most complex fund Act or FATCA. Some 60-plus countries have signed up structures. to cooperate with the IRS in order to enforce FATCA and • Automatic extraction of indicia such as citizenship this year the compliance burden is set to grow yet again. details, Tax IDs, GIINs, and other relevant fields from On 31st May 2017, fund managers will have to submit existing holder records. their first filing under the OECD Common Reporting • Automatic extraction of all parameters and data from Standards initiative, which can best be thought of as government forms. global FATCA or ‘GATCA’. • Dynamic adjustment of compliance status based on Creating an internal programme to comply with indicia documents’ expiration dates and real-time FATCA/GATCA is the first massive hurdle for many monitoring of asset levels. firms. This includes, at a minimum, creating business procedures for the following critical items: Key features of the KURE AML/KYC module include: • Custom risk scoring: We customise the system to Collection of data & documents store the specific risk assessment criteria and use the • Organising and gathering all relevant account holder same risk level assignment paradigm as is used by information. your specific organisation uses. • Tracking and storing government documentation. • Risk-level-based document tracking: Assigned risk level dictates what specific documentation is required Categorisation of in-scope accounts and monitored for receipt. • Tracking aggregate balance of the account holder and • Scalability for any sanction/PEP list provider on underlying beneficial owners. the market: Whether free or purchased, our flexible • Incorporating depository accounts, custodial accounts, solution can interface with any single list or multiple equity or debt instruments, and certain insurance and lists one chooses to utilise. annuity contracts. • Ability to interface with other third party fund administration systems: KURE can serve as a central Identification of US indicia repository for all of your clients’ compliance-related • Collecting and storing indicia; that is, characteristics or data, regardless of whether or not their funds are identifiers which indicate country of origin or resident administered by Koger products. status in order to identify responsible parties for tax • Report withholding and automated email notification withholding. of outstanding documents: The system automatically withholds reports from recalcitrant investors and Further review and reporting informs them of outstanding document requests. • Internal reporting on all types of acquired data. • A team of analysts, business users, and • Reporting to governmental agencies. programmers constantly monitors industry trends and regularly enhances the system to be in sync with the Against this complex backdrop of increased global latest regulatory changes and reporting standards. regulation and compliance, KOGER USA has developed We at KOGER® believe that the KURE application, an efficient, scalable ‘cure’ to remedy the solution. now, more than ever, provides a uniquely scalable, Known as KURE (KOGER Universal Regulatory Engine), flexible, and unified solution for efficient management it helps clients to coordinate the management of all and increased automation of both your anti-tax- aspects of compliance, providing an automated approach evasion-law compliance and operational due diligence that reduces many labour intensive manual tasks. responsibilities. n

IRELAND GFM Special Report Feb 2017 www.globalfundmedia.com | 16 INDUSTRY

14 we will have contingency plans in place for “Private debt fund launches them should they lose those passporting rights in the next couple of years,” says Cyril have been prevalent and we Delamare, CEO of ML Capital. are starting to see pure PE If a non-EU manager is marketing a strategies launch but not to Cayman fund in the UK and Switzerland and nowhere else in Europe, they tend the same extent.” to look firstly at private placement rather Donnacha O’Connor, Dillon Eustace than re-domiciling the fund to the EU, says O’Connor. “Where we see non-EU managers looking hasn’t yet been a big theme, this could first at an EU product is when the product change when the updated LPA is introduced. is going to be marketed to investors that “It was enacted in 1994 and hasn’t been require an EU domiciled fund or where it updated since. We hope some time this is to be marketed into jurisdictions where year to see the amendments made and an private placement is not recognised, such updated version of the Act introduced. as Italy, or where private placement triggers “I think it will be a big selling point for onerous requirements, such as in Germany the jurisdiction. Private debt fund launches and the Nordics,” says O’Connor. have been prevalent and we are starting to ML Capital is very hands on with those see pure PE strategies launch but not to the managers who are looking at the platform same extent,” comments O’Connor. option as an efficient route into Europe. “We listen to what the client needs, in Loan origination changes order to provide the best solution depending At the end of November, the Central Bank on what their strategy requires to be run of Ireland announced that it was making a properly, and what the end investors would number of improvements to the Irish loan be expecting from a fund structuring origination QIAIF; something that Matheson’s perspective. We manage the entire launch Lovegrove says has “kick started” quite a bit and deliver a finished product within an of interest: “We are working on a number of agreed timeframe. projects currently.” “Once the fund launches, we actively Fox says that this decision was the result operate it on an ongoing basis helping of two factors: firstly, the level of interest in managers to manage their service provider the loan origination QIAIFs among investors relationships, their distribution strategy, and secondly, “we had engaged with the their rebate management with the various CBI to make some changes to the product platforms and we also answer any investor requirements in order to make it more usable requests,” confirms Delamare. and flexible.”

Amendments to Irish Limited New Chinese RQFII quota Partnership Act A final growth driver, which should augur As well as ICAV and QIAIF growth, one factor well for Ireland is the announcement made that could facilitate private equity growth over last December that China had granted it a the mid-term is the amendments currently EUR6.89 billion quota under the Renminbi being made to the Irish Limited Partnership. Qualified Foreign Institutional Investor (RQFII) “There’s ongoing work around improving scheme. This comes on the back of the CBI the structural offering that we have with giving its imprimatur to Irish UCITS and AIFs respect to the Irish Limited Partnership Act. that wish to invest through the Shenzhen- Private equity has been a big theme the last Hong Kong Stock Connect programme. 12 months and I think this will continue into “Increased access to China with the 2017,” remarks Lovegrove. RQFII, the amended Irish Limited Partnership Ireland is a jurisdiction that global and the changes made at the end of 2016 managers (especially US managers) are to the Irish loan origination QIAIF are all aware of more generally given its popularity positive developments for the jurisdiction,” for hedge funds and although private equity concludes Fox. n

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