Asian investors are increasingly looking to Ireland as gateway to sell into Europe, according to global law and advisory company The Maples Group. Despite an EU-China investment deal being put on ice over human rights concerns and Brussels’ bid to tighten up its rules on ‘green’ funds, investors are flocking to the continent and using Ireland as a home base.
The head of funds and investment management for The Maples Group in Dublin, Peter Stapleton, says fintech – especially artificial intelligence (AI) and data technology – is where Ireland can offer Asian investors a unique opportunity.
He said: “There’s a very nice potential for the IFSC and what we colloquially call Silicon Docks to merge. That kind of meeting of the fintech space might be a key advantage for Ireland in attracting Chinese investment.”
He added: “I do believe we’re at the very nascent start of that kind of collaboration between those two sectors.”
Chinese investment into the EU has grown more than tenfold in the last decade, with a significant ramp-up in Ireland, although it is still dwarfed by US and UK investment in Ireland.
However, four out of China’s top five commercial banks have operations in Ireland as do major tech firms such as media giants Tencent and social network TikTok.
Meanwhile, Ireland-based investment funds account for over 16 per cent of all EU investment in China, although it’s still a very small percentage of Ireland’s total outward foreign direct investment (FDI).
Michelle Lloyd, a partner at Maples Group’s Hong Kong office, says healthcare is a major growth area for China with investors looking to raise money in Europe to fund new drugs.
She said: “China is really innovating domestically to cater for the growing middle-class population, to the extent that they want to raise money in Europe for that. Ireland’s new partnership structure is perfect for that initiative.”
Last year, the Government introduced a new Investment Limited Partnership, a vehicle for private equity and sustainable investments. With new EU standards on green bonds being phased in over the next number of years, Stapleton said it is a good time for investing in environmental, social and governance (ESG)-linked funds.
He said: “I think an awful lot of people are looking at the opportunities in this area and I think the managers are increasingly seeing their investors demand that they have solutions for moving towards net-zero carbon emissions.”
He added: “We’re seeing a trend emerge where, in the absence of a global harmonised standard, the EU seem to be the furthest progressed and there’s a chance that the EU rules become a gold standard. The European market is of a sufficient size where people will want to design financial products that they can sell in Europe.”
The funds industry in Ireland has had a bumper few years, with almost 15,000 funds under administration in Ireland at the end of 2020, worth a total €5.4 trillion – an increase in value of more than a quarter since 2018. The Maples Group expects continued growth in the industry despite the EU rule changes and a potential global corporation tax coming down the line.
“Ireland has moved well beyond that kind of very narrow way to attract companies”, Stapleton said about Ireland’s 12.5 per cent corporate tax rate.
“As long as Ireland can remain competitive and we’re not undercut with this.” Ireland’s “highly developed” ecosystem for multinationals – especially in tech – will continue to attract investment into the country, Stapleton said, despite any changes to corporate tax rules.
“That will probably continue to provide a key attraction for Asian and global investors into Ireland,” he said.
(The writer is our foreign correspondent based in the UK)
