The Central Bank of Ireland has finalised the framework for Ireland’s ground-breaking loan origination fund structure, which could make the country the home of loan origination in Europe.

The framework will be the first dedicated loan fund regulatory regime in the EU. It will operate under the EU’s Alternative Investment Fund Managers Directive (AIFMD) and will be structured as a Qualifying Investor Alternative Investment Fund (QIAIF).

AIFM authorised managers who meet additional conditions required by the Central Bank’s AIF Rulebook will be able to use the framework to market loan origination funds within the EU under the AIFMD passport. The funds will be open to qualifying investors, including pension funds, who are able to provide an initial minimum investment of €100,000.

The Irish Funds Industry Association has welcomed the announcement, which is a direct result of an increase in demand for an alternative to bank finance. An estimated funding gap in Europe over the next five years of $2 to $4trn has emerged due to restricted access to bank credit and deleveraging in the aftermath of the financial crisis.

Association CEO Pat Lardner said the move would bring new funds, projects and expertise to the Irish funds industry and would position the country as the clear domicile of choice for loan origination funds in Europe.

“The IFIA has been strongly supportive of the initiative since it was first announced," he said.

"The CBI has left nothing to chance, having identified and addressed any potential risks involved through full compliance with AIFMD and additional product specific requirements. The Irish loan originating QIAIF represents an attractive AIFMD-regulated structure for managers seeking to attract professional investors."

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