With the return of President Trump to the White House, and the looming introduction of the EU’s Alternative Investment Fund Managers Directive 2.0 (AIFMD 2.0), 2025 is shaping up to be an extraordinarily busy year for the $14.7 trillion private market fund industry[1].
As managers look to navigate these sweeping political and regulatory changes, many reviewing their fund domiciliation choices, with Ireland expected to be one of the biggest beneficiaries.
The Trump effect: A new normal for private markets
Barely a few weeks in power, the Trump Administration is already shaking up private markets.
Although the wider investment industry is likely to benefit from Trump 2.0’s de-regulatory zeal, private debt and private equity firms are bracing themselves for market volatility in the weeks and months ahead as evidenced by the S&P 500 losing 3.1% last week, posting its worst week since September.
The imposition of 25% tariffs on all imports coming in from Canada and Mexico, the increase to 20%[2] on Chinese imports is expected to fuel inflation and might force Central Banks to either put the brakes on their recent monetary policy easing, or once again raise interest rates.
Such rate increases, should they happen, will be felt acutely across private markets. Higher borrowing costs could disrupt deals particularly private equity, real estate private debt funds – many of which are structured to be floating rate – are better positioned than other strategies. Meanwhile, other transactions have been disrupted by the recent geopolitical tensions over the last few weeks.
AIFMD 2.0 incoming
While the US is lifting several of its regulations, the opposite is happening in the EU, especially following the passage of AIFMD 2.0, which is currently being transposed into national law by Member States and will apply EU-wide from April 2026.
With 12 months to go, private debt firms are readying their businesses for AIFMD 2.0 compliance.
AIFMD 2.0 introduces changes to the rules around marketing, authorisation, reporting, delegation, conflicts of interest and liquidity management, until loan origination and leverage comes under much closer scrutiny, impacting private debt.
Under AIFMD 2.0, AIFMs carrying out loan origination activities will now be subject to stricter:
- diversification limits
- 5% risk retention obligations
- lending restrictions
- added disclosure provisions
- a ban on originate to distribute strategies
- requirements to have policies and procedures in place when granting loans, assessing credit risk or administering/monitoring credit portfolios[3].
In addition, loan originating AIFs must be closed ended, unless the AIFM can demonstrate to regulators that their liquidity risk management processes are compatible with the investment strategy and fund redemption policies.
Leverage limits will also be imposed, with open ended loan originating AIFs subject to a 175% leverage cap, rising to 300% for closed ended funds[4].
Time for stability…
As private debt firms grapple with the implications of Trump 2.0 and AIFMD 2.0, choosing the right fund domicile has become increasingly important.
In today’s market, jurisdictional stability and expertise are non-negotiable, and these play to Ireland’s advantage. JTC is seeing more asset managers, including those running private debt strategies, re-evaluating their fund domiciles, and shifting business to Ireland.
Ireland’s advantages include a deep pool of service provider talent, common law legal framework, and double taxation treaty with the US. The country also has an extensive range of flexible fund structures such as the Irish Collective Asset Management Vehicle (ICAV), the Irish Limited Partnership (ILP) and the 1907 LP Model, all of which can be leveraged by private debt funds.
The ICAV meets all the necessary criteria under US tax rules, while the ILP allows managers to obtain many of the same benefits as a Cayman Islands or Luxembourg based structure within an Irish regulatory framework. Additionally, the ILP is tax transparent, while authorisations from the Central Bank of Ireland (CBI) tend to be made quickly, which is another compelling selling point.
The 1907 LP structure is becoming increasingly popular with smaller or start-up managers, as unlike the ICAV and ILP, this set up does not require firms to register with the CBI.
The private debt sector’s move towards Ireland is a strategic response to unprecedented political and regulatory changes. As managers seek certainty in this complex environment, Ireland stands out as a jurisdiction that combines stability, expertise, and a favourable regulatory landscape
For fund managers looking to navigate the challenges of 2025 and beyond, Ireland offers compelling advantages that align closely with their needs.
[1] Preqin – February 17, 2025 – Private capital fundraising: challenging 2024 hints at areas for growth in 2025
[2] Financial Times – March 4, 2025 – Stocks fall as Donald Trump imposes tariffs on top US trade partners
[3], [5] Osborne Clarke – September 30, 2024 – AIFMD II: what Europe’s fund managers need to know about the new loan origination regime
