IRELAND Trends and Developments Contributed by: Enda Garvey, Brian McCloskey and Robert Maloney Derham, Matheson LLP
focus of Irish political and industrial strategy. Succes - sive Irish governments have made it clear that having a practical, commercially focused and efficient FDI screening regime is needed to implement EU policy, but that FDI will continue to form an important part of the Irish economy – recent estimates indicate that 20% of all private sector employment is attributable to FDI. The Screening of Third Country Transactions Act 2023 (the “FDI Act”) is designed to ensure that Ireland is equipped with the necessary legal powers to screen certain investments by ‘third country’ (ie, non-EU, EEA and Switzerland) undertakings and indi - viduals that relate to particular critical sectors, inputs or technologies with an Irish nexus. It is clear that, while Ireland’s FDI regime is still evolv - ing and remains less developed than screening regimes in other EU member states, many private equity deals with a non-EU component may be notifi - able to the Irish Department of Enterprise, Tourism and Employment (DETE), although there is currently limited visibility on FDI precedents/trends in Ireland since the FDI screening regime has very recently come into effect. However, a notable trend that has been seen in practice in response to this uncertainty is that many acquiring entities are opting to file in compliance with the FDI Act as a precaution, on the basis that such transactions will be ‘screened out’ expeditiously by DETE. As such, with the regulatory framework still evolving, it is essential that private equity firms inte - grate FDI analysis into any cross-border transaction considerations. Irish dealmakers involved in transactions where any of the parties are beneficiaries of foreign subsidies must also be cognisant of the additional mandatory notification requirement under the EU Foreign Sub - sidies Regulation (FSR), where certain thresholds in relation to “financial contributions” from non-EU gov - ernments have been met by the undertakings involved in a transaction. This additional burden will sit along - side existing merger control and/or foreign investment notification requirements and further impact comple - tion timelines for transactions involving private equity firms. A significant proportion of private equity activity has been caught by the FSR regime (potentially due to the low “financial contribution” level needed to meet the FSR filing threshold), with private equity sponsors
accounting for roughly a third of all FSR notifications that have been submitted to the European Commis - sion since the regime came into effect – the largest of any notifying cohort currently. It is likely that this trend will continue into 2026. Investment Limited Partnerships Ireland has now seen the establishment of over 65 Investment Limited Partnerships (ILPs) by private asset managers, including those operating private equity and private credit strategies. This represents a steady increase since the updates to the new limited partnership regime in 2021. The ILP was designed to be a market-leading vehicle as compared to similar vehicles such as the UK private fund limited partner - ship, the Luxembourg SCSp, the Delaware limited partnership or the Cayman exempt limited partner - ship. The ILP has a lot of similarities in terms of key features that investors have come to expect from similar fund structures, including: the ILP is a tax-transparent vehi - cle; it retains confidentiality of the identity of limited partners; and it is not subject to the legal and other requirements that apply to incorporated vehicles. Some key distinguishing features, compared to oth - er jurisdictions, are its ability to be structured as an umbrella fund with separate sub-funds, with segre - gated liability between those sub-funds; the GP does not need to be located in Ireland and does not need to be a corporate vehicle; and the ILP is also regulated, using Ireland’s existing flexible, fast and robust QIAIF regime. The QIAIF regime has been in use for over 15 years and includes a 24-hour approval filing process by the Central Bank, which does not conduct a prior review of the fund documents. The ILP regime is now tried and tested, and the feed - back from both managers and investors on their expe - riences with the new structure has been very positive, in relation to both the legal and tax structure itself and the pragmatic approach experienced in estab - lishing and maintaining an ILP in Ireland as compared to other jurisdictions. We expect further interest from financial sponsors and a continued increase in the number of ILPs established as information regarding the benefits of the ILP structure continues to perme -
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