Job creation bonus as Ireland begins to lure hedge funds

Since laws simplifying the process for redomiciliation came into operation earlier this month, hedge funds are queuing up to come to Ireland. The upshot of this is extra work for support services to the industry, which is likely to create jobs going forward.

The Companies (Miscellaneous Provisions) Act 2009, aimed at making it simpler for hedge funds to domicile in Ireland, was passed into law in December last year, but only came into force in September. The Irish Funds Industry Association says that it's seen enquiries from some 200 hedge funds looking to redomicile to Ireland.

The process takes around six months in all.

Part of the motivation for the new legislation was to capitalise on the push for hedge funds to move to more regulated financial centres in the wake of the financial crisis.

Unfortunately, this is unlikely to mean any front office roles being created locally, with the hedge funds simply registering in Ireland rather than making a wholesale move.

However, funds setting up in Ireland will need to appoint locally-based service providers, including custodian or prime brokers, administrators, law firms and directors. And these firms will need to staff up.

"Investment management functions can be carried out anywhere in the world, and the distribution is likely to be set up in the country the funds are selling to," says Brian Clavin, partner at KPMG in Ireland who provides set-up advisory services to companies in the investment funds industry.

"However, as a rule of thumb there's likely to be an average of one and a half jobs per fund that redomiciles created within administration, custody and other support services in Ireland. With the number of funds looking to move, this can add up."

The motivation for attracting funds to Ireland is obvious - providing a greater volume of work to the industries that support the sector, which have suffered in recent years.

"The fund industry went through a period of consolidation in 2009, with redundancies and pay freezes commonplace," says Patrick Kelly, director of Lincoln Search & Selection. "This year has seen a pick-up in recruitment activity, but next year I'm envisaging substantial growth among fund administrators as well as law and accountancy firms that service the funds industry."