dublin as an international financial centre...crystallised over 30 years ago advancing its fund...

Dublin as an international financial centreView from the asset management industry

> What are the unique differentiators of Dublin as an International Financial Services Centre?

> What are the consequences of Brexit for Dublin?

> How is Ireland building its talent pool to keep up with the growing pace of the fund management industry?

> What are the growth trends in ESG investing and how will this shape Dublin’s future?

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SANNEGROUP.COMIssue 14 | October 2019

MAKING THE DIFFERENCE FOR OUR CLIENTS

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SANNEGROUP.COM

Welcome to our 14th issue of SANNE

Connect our regular technical bulletin for

fund managers, their intermediaries and

investors.

Modern Ireland is thriving in an economy that can be

ranked as one of the fastest-growing in the world. In light

of recent regulatory developments within the UK and EU,

SANNE hosted a technical roundtable featuring leading

industry experts to discuss the positive changes our

clients are experiencing. Interwoven through the

discussion, our expert panel explored the essentials in

infrastructure, knowledge and culture to attract best

talent and how to entice global networks to Ireland.

Our Dublin roundtable panel gathered leading industry

professionals, moderated by Caroline Burkart, Associate

Partner at Scorpio Partnership. The panel included the

following experts:

> Gayle Bowen – Partner, Pinsent Mason, Dublin

> Niamh Mulholland – Director, Asset Management Regulatory practice, KPMG

> Brian Hastings – Investment Manager, SDCL Ireland

> Philip Dempsey – Country Head – Ireland, SANNE

The key themes under discussion were:

> What are the unique differentiators of Dublin as an International Financial Services Centre?

> What are the consequences of Brexit for Dublin?

> How is Ireland building its talent pool to keep up with the growing pace of the fund management industry?

> What are the growth trends in ESG investing and how will this shape Dublin’s future?

In this special edition of SANNE Connect, we share what we

have learned from Dublin’s industry leaders. We cover the

latest insights affecting the industry as a whole, based on the

discussions between our panellists at the roundtable.

I do hope you find this special edition of SANNE Connect

insightful.


1. Caroline Burkart 2. Gayle Bowen 3. Brian Hastings 4. Niamh Mulholland 5. Philip Dempsey

1 2 3 4 5

Philip DempseyCountry Head – Ireland

SANNE

e. [email protected]

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Ireland has been an early mover in the

financial services industry since the start

of the 1990s. The country’s commitment

crystallised over 30 years ago advancing

its fund management infrastructure

substantially, to now employing more

than 17, 000 people in financial services

and comprising approximately 45

highly-rated administration companies.

Dublin’s journey to 2019

Ireland’s long-term investment has placed the city at an

advantage relative to its European peers.

The fund management landscape is certainly evolving

rapidly in Dublin. Until 2017, Ireland was still

predominantly known in the asset management space

for regulated funds (e.g. UCITS, hedge funds) and fund

administration. The latter has become a differentiated

expertise, with Ireland now servicing over 60% of

European funds and 40% of funds globally.


KEY TOPICS

> Key learnings from Dublin’s journey to date

> How does Dublin’s regulatory expertise compare to its counterparts?

> What’s changed in the alternatives sector?

The helicopter view:

How has Dublin grown in

stature and importance as an

international financial centre?

A major trend over the past two years has been the

escalating number of asset managers choosing to

relocate to Ireland. With the UK’s imminent departure

from the European Union, data suggests that between

60-70% of large UK managers have chosen Ireland as

their post-Brexit EU domicile, compared to 20-30% that

selected Luxembourg.

The increased presence of asset managers at fund

conferences and events is already changing the

information flow in the Irish market. The prospect of a

hard Brexit looms large for the UK, so it remains to be

seen whether the current trend of managers delegating

activities back to the UK will go into reverse.

Regulatory expertise

Ireland’s regulatory expertise has also contributed to its

growing confidence and stature as an international

financial centre of choice. Indeed, the authorisation

processes and fund efficiency that those enable, were

an important part of the early enquiries about

relocation that immediately followed the June 2016 UK

referendum result.

“Compared with other new European

jurisdictions trying to get into this space, Malta

for example, they simply don't have the

infrastructure we have here in Ireland. Even if

they are cheaper and quicker to use, they're still

not able to make inroads. It takes years to build

up the expertise and volume of skilled workers in

the sector.”GAYLE BOWEN

Gayle BowenPartner and Head of Dublin Office

Pinsent Masons


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Brian Hastings, Investment Manager for SDCL Ireland

comments, “SDCL first launched an investment fund in

Ireland five years ago, having identified Dublin as an ideal

location, both from a commercial and operational point of

view, to do business. We provide energy solutions to large

scale energy users, and fortunately, in Ireland there is a rich

landscape of tier one investment grade multinationals

operating at scale in our target sectors which include the

technology, pharmaceuticals and agrifood industries.”


“The pathway is well-worn. We’ve previously

had a seat at the Investment Management

Standing Committee at the European

Securities and Markets Authority (ESMA).

Having a strong presence is a benefit when

we’re thinking about adaptable or innovative

new fund structures. There’s a very strong

domestic legislative agenda around funds and

fund structuring in Ireland.”NIAMH MULHOLLAND

As these dynamics continue to evolve, this will

impact the agenda around transparency,

technology and disclosures.

Alternatives sector

Looking at the alternatives market, Ireland’s fund

management industry has seen a strong year of growth

relative to 12 months ago. The investor pool is changing,

with a shift in emphasis in recent market commentary

towards the growing demand from private wealth for

alternatives (as opposed to institutional investors).

While the Irish regulator and broader industry are

well-plugged into the European and international policy

debates, the regulator remains in a strong position to

represent the industry, seek technical feedback from

industry participants and, using case scenarios, work

closely on questions of legislative reform with the

European Commission.

Being able to plug seamlessly into an operational

ecosystem of lawyers, accountants, administrators and

depositories has been a powerful selling-point for the

country and presents several opportunities.

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KEY TOPICS

Once the UK gains third-country status,

economic growth in Ireland will depend on

the economy remaining open and

maintaining its strong investment links with

key trading partners – including the UK.

Regulatory Impact

Niamh Mulholland, Director, Asset Management

Regulatory practice, KPMG clarifies some key

characteristics of the asset management sector that enable

it to be adaptable to major regulatory change – specifically,

a highly developed third-country equivalence framework

and a global footprint.

This will help mitigate some of the negative consequences

of a potentially disorderly Brexit.

Naturally, there will be challenges for supervision in the

post-Brexit environment but there are also visible

opportunities for fund distribution and growth in Europe.

The slow-burning efforts seen have pushed capital market

unions under the outgoing European Commission as a

favourable initiative that is likely to be taken up by the

incoming administration.

Brexit: where does Dublin go from here?

SANNEGROUP.COM


“SDCL’s investments range from mid to long

term projects, which means they last anywhere

from five to 20 years. With so much uncertainty

in the current market in terms of future

property, energy and carbon tax pricing, we see

significant opportunities to deliver cheaper,

cleaner sources of electricity and power for our

clients on a long-term fixed price basis.”

BRIAN HASTINGS

Dublin’s competitive position: better or worse?

Notwithstanding probable economic turbulence following a

UK exit from the European Union, the competitive position of

Ireland is likely to strengthen. Longer-term advantages will

include being the only remaining English-speaking Member

State within the European Union with a common law

legislative framework, as well as other less tangible factors

such as cultural alignment between Ireland and the US.

> What is the regulatory impact?

> Are there more opportunities for fund managers?

> Dublin’s competitive position: better or worse?

KEY TOPICS

Fund management opportunities

For fund managers looking ahead to a post-Brexit future, the key

considerations are most probably access to capital and investors.

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“Being familiar with the legal regime and being

able to talk the same language as your service

provider is important. The other key

differentiator for Ireland is pricing. We’re not

the cheapest domicile out there and we’re not

looking to be, however, we are well priced in

comparison to the more established and

mature jurisdictions that offer a similar well

regulated product, which is evidenced by the

number of ETFs established in Ireland.”

GAYLE BOWEN

Philip Dempsey, SANNE’s Country Head for Ireland, noted

that Dublin’s combination of concentrated industry expertise

and the stable regulatory environment makes it very

attractive to the underlying investor base of the funds

industry.

*Indecon Assessment of Economic Impact of the Funds

Industry on the Irish Economy.

“20 years ago, there was no trust or experience

in Ireland, but the industry is in a very different

position today. That’s reflected in client demand

and how positively they perceive the

concentration of experts here. We hear clients

wanting to expand their operations in Ireland,

whether they’re using law firms, third-party

service providers, administrators or audit

firms.” PHILIP DEMPSEY

Moreover, the Irish funds industry has been proactive in

developing its product range and has also made a

concerted effort to emphasise its positive impact on the

Irish economy. The Indecon Report* recently reported

that the total contribution of the investment funds

industry to the Irish Exchequer totalled €837 million and

nearly 33, 000 people were employed in 2018 (either

directly or indirectly).

Dublin is strengthening its

competitive positioning relative to other European

jurisdictions

SANNEGROUP.COM

A world of innovation Ireland’s got talent

Looking at Ireland’s talent pool, as more

fund managers relocate to Ireland, the

industry appears to be challenged in

finding the right people to cope with the

increased demand.

Shifting workplace expectations

Firms are finding it difficult to attract staff at all levels, from

entry-level to partner, placing a constraint on growth at a

time when they need to ramp up their presence on the

ground.

Our panel unanimously agreed that there is stiff

competition for talent and the incentives to attract good

people are now diversifying beyond compensation – into

flexibility, worklife balance and workplace culture. For

instance, employees’ escalating expectations have shone a

spotlight on employer practices, such as their diversity and

inclusion policies.

“While money is important, candidates are also

intently focused on lifestyle, flexibility and equal

promotion opportunities for men and women.

We operate a fully flexible working policy and

that is helpful and attractive – not only to

women. Male employees prioritise spending

quality time with their children just as much as

female staff. It’s about everyone having genuine

choices.” GAYLE BOWEN

KEY TOPICS

> How are workplace expectations shifting?

> The importance of agility in fund management

KEY TOPICS

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“As the regulatory system and rule book are

really developed around the sector, some

professional qualification providers have now

come on board for people to train while

they’re on the job or do part-time studies.

That training is going to give young talent the

depth of skills and ability to move around in

years to come.” NIAMH MULHOLLAND


Niamh MulhollandDirector – Asset Management Regulatory Practice

KPMG


Agility in fund management

When it comes to the search for great talent, the Irish fund

management sector is taking a dual approach. In the short term,

investment management in particular is benefiting quite clearly

from a strong flow of Irish expatriates relocating to the country,

bringing with them international skills and experiences.

At the same time, there are concerted efforts within firms to

enhance training and development to nurture younger talent and

give them a suite of skills, empowering them to move into different

roles in the future.

SANNEGROUP.COM

Evolution of the sector

Over the past ten years, Dublin has seen widespread

changes in how sustainable investing is perceived, both by

fund management professionals and end-investors in

Ireland. In the past, investments that incorporated

Environmental, Societal and Governance (ESG) criteria were

seen as a niche interest, typically only relevant to the

charitable sector and religious organisations. Now, it is

accepted that sustainable investing is appropriate for

investors of all hues and can improve long-term financial

performance.

The risk is that there now appears to be many funds in the

marketplace that claim to be focused on sustainability, but

where the degree to which ESG factors are reflected in the

investment strategy is questionable. This calls from more

regulatory clarification on definitions and criteria.

KEY TOPICS

> How will ESG help evolve the sector?

> What should companies do when casting forward?

The role of ESG in Dublin’s future

“We have a fund mandate to deliver very specific

sustainability targets including reducing energy

demand for building and infrastructure owners

and users. There are a lot of funds out there that

claim to be ESG focused funds, however, SDCL can

stand over the delivery of primary energy savings

that contribute towards our national energy

efficiency and renewable energy targets.”

BRIAN HASTINGS

Casting forward

Looking ahead to future growth in the sustainable investing

sector, it is clear that the Irish regulator will need to play a

role in finding a more consistent use of terminology to

assess performance against ESG targets.


Brian HastingsInvestment Manager

SDCL Ireland


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“We’re seeing a lot of innovation to try and meet

investor demand for ESG products, which is led by

the demand from the investor community.

Regulators will certainly catch up to it. Right now,

I would differentiate between sustainable finance

and the particular initiatives that are coming out

at the regulatory level, which are going to impact

how firms access capital markets and how

lending happens. This is going to be a seismic

shift in the next couple of years, so to do that

without clear parameters would be potentially

disruptive for the industry.” NIAMH MULHOLLAND

In the absence of a clear and agreed regulatory framework,

the fund management sector is taking the lead by using the

UN Sustainable Development Goals (UNSDGs) as

parameters for fund performance, however, as this

investment approach becomes more mainstream,

regulatory intervention may also be necessary to support

investor understanding of exposure to the sector and its

alignment with their longer-term objectives.

ESG takes root

Without a level playing field it is difficult for investors to

make worthwhile comparisons between potential

investments without standardisation on how ESG factors

are measured and recorded. There is a danger of “green-

washing” as entities look to exaggerate their ESG

credentials. The difficulty essentially comes down to what

should be included, how is it measured and how is it

presented (sometimes ESG is integrated into the financial

statements, included as a separate report or referred to an

ESG policy on a company’s website), and all of these

variables can change depending on investor or managers’

stance on the matter.

Managers will need to reprioritize to align themselves to

their target investors.

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AMERICAS

BVI*

Cayman Islands*

New York

San Diego

EMEA

Belgrade

Cape Town

Dubai

Dublin

Frankfurt*

GuernseyJersey

London

Luxembourg

Madrid

Malta

Mauritius

Netherlands

Paris

ASIA-PACIFIC

Hong Kong

Japan

Mumbai

Shanghai

Singapore

Tokyo*Affiliated partner

More than 1, 600 people worldwide

FTSE 250 listed business

In excess of £250bn AUA

SANNE has undertaken to engage with all of the markets in which it operates to share knowledge, collaborate with peers and hear from industry leaders as to their thoughts on the key issues and topics affecting the industry and its practitioners.

Established for over 30 years and listed on the Main

Market of the London Stock Exchange, SANNE has more

than 1,600 employees worldwide and has in excess of £250

billion assets under administration. Our network of offices

provides managers with highly skilled and director-led

teams of asset class specialists.

As leaders in the alternative assets industry, SANNE

delivers tailored fiduciary services to a highly valued

international client base. SANNE has a global network of

regulated businesses within 20 leading financial

jurisdictions across the Americas, EMEA & Asia-Pacific.

Each specialist business is led by directors with extensive

asset and market experience, supported by multifunctional

teams. These teams are aligned to the specific

requirements of each client across one accredited

platform.

We are one of the leading global providers of alternative asset and corporate services. We make the difference for our clients.

Should you wish to find out more about our services or our global offices please speak to us, we would be delighted to hear from you.

We take great pride in understanding the unique needs of each individual clients to create tailored business solutions.


SEAN MURRAYManaging Director

EMEA

t. +352( 0) 27 61 62 88


PHILIP DEMPSEYCountry Head – Ireland

t. +353 (0) 1 906 2202


STEVE INNESDirector – Regulated Funds

Dublin

t. +353 (0) 1 906 2259


JAMES KAY-HARDSAssociate Director – AIFM Services

Dublin

t. +353 (0) 1 906 2235


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SANNEGROUP.COM

To find out more about SANNE, please email Philip Dempsey, our Country Head – Ireland, [email protected] or alternatively visit us online, sannegroup.com

Information on SANNE and its regulators can be accessed via sannegroup.com


EDITOR: Sivani Pillay – Marketing & Communications ManagerDESIGN: Lorna De Freitas – Marketing & Corporate Communications Administrator

dublin as an international financial centre...crystallised over 30 years ago advancing its fund...

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