The Central Bank of Ireland held its second Authorisation Seminar in June with the focus on Qualifying Investor Alternative Investment Funds more commonly known as QIAIFs.
QIAIFs are approved by the Central Bank within 24 hours of filing the required documentation and since 2007, over 2,500 QIAIFs have been authorised representing almost 50% of the population of authorised funds in Ireland.
The QIAIF provides a flexible regulatory regime with a limited number of investment and borrowing restrictions.
Applications requiring pre-submission
Funds investing in property, life settlements or those funds originating loans (Lo-QIAIFs) will be among the categories requiring pre-submission. Pre-submissions will normally require a model portfolio, detailed rationale for the strategy and liquidity information to be provided.
Property Funds will need to describe the rationale for leverage limits; details of the expected number and type of shareholders; depending on redemption arrangements an assessment of liquidity of the portfolio and information on bank loans and covenants.
Life Settlement Funds will have to disclose the nature of the life settlements they are investing in (e.g. life-contingent settlements or guaranteed structure settlements; the parties involved and their experience and the acquisition process.
The Central Bank already has detailed disclosure and prudential requirements for Lo-QIAIFs with approximately 50 being authorised since 2016.
Any fund which has a high degree of leverage will also be required to make a pre-submission to the Central Bank. Such submission should detail how the level of leverage relates to the investment strategy and be a realistic limit
Notwithstanding that QIAIFs are targeted at primarily sophisticated institutional investors the Central Bank has resolved to strengthen its oversight of this area by requiring pre-submissions in certain circumstances. It is expected that Management Companies and Fund Boards will exercise sufficient scrutiny of the proposed fund, its investment strategy and “unusual” features prior to making a submission to the CBI.