Central Bank Consults On Loan Originating Funds

As envisaged during its consultation on the implementation of the Alternative Investment Fund Managers Directive ("AIFMD"), the Central Bank of Ireland ("Central Bank") has issued a detailed discussion paper seeking industry comment on the possibility of allowing Irish domiciled non-UCITS funds engage in direct loan origination (the "Discussion Paper").

Many client asset managers, particularly US and UK managers, have regularly expressed interest in setting up funds which can engage in direct lending to commercial enterprises, having recognized that many such enterprises have found it difficult to access lending facilities since the onset of the global financial crisis.

Although Irish funds have for many years been able to invest in loan assignments and loan participations, the Central Bank has not to date permitted Irish funds to originate loans (i.e. for lending to form part of its investment strategy and for the fund to be the lender of record). In its