Private markets including private equity, hedge funds and credit funds have grown rapidly since the global financial crisis, in tandem with the relative sidelining of banks and other traditional industries. The regulatory environment has struggled to keep pace.
The funds and asset management industry employs 19,519 people directly in Ireland and contributed nearly €1bn in direct tax revenue in 2023, according to a report by economic consultants Indecon commissioned by Irish Funds, the industry’s representative body.
Direct employment in the sector increased 22pc over the past five years, with nearly half of those working in the industry now located outside Dublin, the report said.
However, the report identified what it said are key challenges that could threaten the industry’s EU and global competitiveness, including in the legislative environment.
The sector here, which manages around €4.3trn of assets, has successfully developed around publicly listed assets including the growth in exchange traded funds (ETFs). But it needed regulatory support to expand to match the growth in private assets – such as equity funds and lending by non-banks – which make up an increasingly big share of the global economy and internationally managed assets, according to Pat Lardner, chief executive of Irish Funds.
“We operate in a fast-moving, innovative and competitive environment, There is an opportunity to strengthen our policy and legislative framework to ensure it remains aligned with international best practices. By taking proactive steps, Ireland can continue to build on its status as a global leader,” he said.
To ensure Ireland remains competitive relative to rival fund management jurisdictions, which include Luxembourg and the UK, he said targeted updates are needed to close gaps in the private asset space.
“Closing this gap won’t require major changes,” he said. “Minor adjustments could bring immediate benefits.”
The Indecon report says the sector generated €2bn in wages in 2023, including investment and asset managers, fund administration and legal services.
“We are seeing a mix of green lights in terms of growth potential, but some metrics are beginning to flash amber or red,” the Irish Funds CEO said.
“Collaboration between the industry and government will be essential in ensuring that Ireland’s policy framework supports long-term competitiveness.”