24-hour approval for Irish direct lending and certain real estate AIFs

On 1 July 2022, the Central Bank of Ireland (the Central Bank) published updated guidance with regard to the authorisation process for certain types of alternative investment funds (AIFs).

By way of background:

• QIAIFs are Irish AIFs aimed at qualifying investors (i.e., professional investors plus high net worth individuals, family offices etc)
• they are approved by the Central Bank on a fast-track basis, within 24 hours of submission of the authorisation application, with no review of the documentation conducted by the Central Bank
• instead, the Central Bank relies on the AIFM and legal advisers to the QIAIF confirming compliance with the relevant rules.

In 2020, the Central Bank introduced a pre-submission process for certain asset classes, namely

• loan origination funds
• real estate funds and
• funds investing in life settlements.

The Central Bank has now revised its position so only funds investing in Irish real estate or crypto assets are required to use the pre-submission process.

AIFs investing in all other asset classes - including loan origination, non-Irish real estate and life settlements - will be approved by the Central Bank using the 24-hour fast track approval process.

Where an AIF proposes to invest no more than 10% of its net asset value in cash-settled Bitcoin futures traded on the Chicago Mercantile Exchange, no pre-submission is required. This is provided that the application refers to the inclusion of crypto-assets exposure, or for a post authorisation amendment, shareholder approval is obtained for such revision to the investment strategy.

Simmons & Simmons recently held a webinar with James O'Sullivan, head of funds authorisation at the Central Bank, during which the Central Bank's approach and outlook for private funds was discussed in detail, including in relation to the proposed revisions in AIFMD2 for loan origination funds, as well as ELTIF.

The webinar is available here.

Please also see here for further information on the establishment of private funds in Ireland.