AIFMD 2: Ireland’s Strategic Advantage  

Private market managers are having an intense start to the year, and for those weighing up their AIFMD 2 fund domicile options, the clock is ticking.

The $16 trillion¹ private markets industry is busy firefighting as GPs look to shield their portfolios from events in the Middle East and the worsening market volatility. At the same time, firms are also working to figure out how AI will impact both firm operations and portfolio companies.

All of this is taking place against a backdrop of EU regulatory reforms, with the Alternative Investment Fund Managers Directive 2 (AIFMD 2) due to go live on April 16, 2026².

Lloyd Collier, Senior Director, UK & Ireland, wrote last year about how AIFMD 2 and the Trump Administration would keep the private markets industry busy, a story that seems to be repeating itself in 2026. Let’s take a deeper look at how the new regulation could reshape private markets, and what it means for Ireland as a fund domicile.

AIFMD 2: Key changes for loan origination funds

The original AIFMD, first proposed in 2009, was nothing short of transformational for the alternatives industry.

Coming in the aftermath of the 2008 Global Financial Crisis, the regulation overhauled the alternatives industry by introducing a new regulatory reporting framework – Annex IV, curbed remuneration, imposed minimum capital requirements, and forced managers to appoint a depositary for oversight, cash flow monitoring and asset safekeeping purposes.

AIFMD 2, while not as far-reaching as its predecessor, will still have a big impact on the industry, particularly on private debt funds.

The ban on ‘originate to distribute’ strategies

Under the updated rules, ‘originate to distribute’ strategies – whereby a manager originates loans before selling them onto third parties – will be banned. Along with concentration limits and certain restrictions around lending, risk retention rules are also being introduced, requiring private debt managers to retain 5% of the notional value of loans being originated and transferred³.

Open-ended vs closed-ended loan origination funds

AIFMD 2 further stipulates that loan origination funds should be categorised as closed-ended, unless they can demonstrate to their home regulator that their liquidity risk management profiles and practices are compatible with those of an open-ended fund structure. For open ended loan origination funds, leverage will be capped at 175% of NAV, rising to 300% at closed-ended funds.

Operational and disclosure requirements

And finally, the new regulation requires managers to have in place policies, procedures and processes for granting loans, assessing credit risk, and administering and monitoring credit portfolios, together with added disclosures around fees and expenses⁴.

Although AIFMD 2 will be costly for the private markets industry, the rules harmonise the EU regulatory landscape for loan origination funds, making it easier for GPs to manage their cross-border operations.

The industry is well-prepared and has been for some time now. While smaller managers may not have the resources to point to the implementation of the directives, most experts expect the roll out will be seamless for private debt managers.

Why Ireland is in pole-position to benefit

Ireland is well-placed to capitalise on the new regulations. In 2025, the Central Bank of Ireland confirmed that it would remove the L-QIAIF regime from the statute books, make some further critical revisions to the AIF rulebook, and would not be doing any Gold-Plating of AIFMD 2, putting Irish loan-originating funds and managers on the same level playing field as the rest of the EU.

Ireland has long been regarded as a leading EU fund domicile. It is highly successful funds industry is underpinned by the country’s stability, a sensible and proportionate regulatory approach, a common law framework, a double taxation treaty with the US, and a deep pool of fund administration service provider talent. Ireland also offers an extensive range of AIFMD-compliant fund structures, including the ICAV (Irish Collective Asset Management Vehicle), ILP (Investment Limited Partnership) and the unregulated 1907 LP.

Meanwhile, for US managers looking to diversify their marketing and distribution campaigns into Europe, Ireland’s shared language and culture make it an attractive fund domicile choice.

These favourable conditions have put the country in an excellent position ahead of AIFMD 2.

How to prepare: working with the right service provider

If managers are to truly thrive in an AIFMD 2 environment, they should engage with leading fund administration service providers, such as JTC, who have the depth of experience and expertise to support them as the new regulation starts to bite.

Find out more about JTC’s services 

¹ Bank of England – The Bank of England’s private markets system-wide exploratory scenario exercise

²AIFMD II Timeline to Implementation One year on

³ Dechert – January 19, 2026 – AIFMD 2 – A focus on Loan origination

⁴ Dechert – January 19, 2026 – AIFMD 2 – A focus on Loan origination