Consolidation and growth in Ireland’s corporate administration sector

Joanne McEnteggart, Managing Director, Ireland, IQ-EQ looks at how the corporate administration sector has become a key investment area.

PARTNER CONTENT IN ASSOCIATION WITH IQ-EQ

Successful corporate administration businesses have become a key investment area for private equity firms the world over, owing to strong predictions in EBITDA growth as well as excellent cash generation and annuity income potential. Moreover, the sector is increasingly seeing larger competitors purchase smaller firms in key markets, and similar-sized firms coming together in an attempt to gain greater efficiencies and grow their market share.
This growing consolidation trend is driven by the increasing complexity of international regulation and compliance requirements, paired with clients becoming more global in their outlook. Smaller and simpler firms are finding it more difficult to offer clients adequate cross-border solutions and multi-sector expertise. They can also struggle to meet capital requirements when servicing clients in the regulated institutional space, and to keep pace with fast-paced AML changes and major regulatory developments such as CRS and GDPR.

M&A deals

In Ireland alone, recent years have seen numerous M&A deals take place within the sector. Several smaller corporate services businesses have been swallowed up by larger international players, as have the Irish corporate administration divisions of global banking conglomerates.

At IQ-EQ Ireland, our experience has followed a similar path. Formerly First Names Group, we were purchased in July 2018 by SGG Group – adding Ireland (among other key jurisdictions) to the latter’s growing global presence. Together with SGG’s subsequent key acquisition of fund administration specialist Augentius, we have joined forces to form the world’s fourth largest investor services firm, with 2450+ professionals operating across 23 jurisdictions.

This integration culminated on 25 March when we launched our new global brand: IQ-EQ. The consolidation of our legacy international businesses has opened up new markets and services to our clients while enhancing our existing internal processes and introducing new best-in-class practices across the combined group.

Ireland’s importance in the corporate administration sphere

So as the pool of administration providers continues to fuse and strengthen on a global scale, where does Ireland stand in terms of jurisdictional priorities? I am happy to say that never before in the corporate administration sphere has Ireland been considered more important to have within a firm’s geographical spread.

There are many reasons for this; firstly, as a hedge against Brexit and its prolonged uncertainty. What does Brexit mean for entry into the UK market and the ability to export from the UK to the rest of the world? The tariffs, custom or duties that will apply to products are still unclear and will remain so for some time even after an exit has been agreed. Companies with EU-regulated products therefore have to find an immediate alternative for achieving EU approval, and establish themselves in that jurisdiction. Ireland has emerged as a valid and firm alternative for setting up company operations in order to enter into the European market.

In the funds industry, Ireland is considered a key market by US managers and is increasingly popular among those focused on alternatives, with the Irish Collective Asset-Management Vehicle (ICAV) being the product of choice for investments in this sector. Notably, PERE fund managers are not only using Ireland for structuring purposes but are now creating a presence in the jurisdiction. On top of this, Ireland remains the leading global centre for aircraft leasing, home to 14 of the world’s top 15 leasing companies, with Irish lessors managing more than €100 billion in assets.

FDI into Ireland

From IDA statistics, Ireland is ranked first in the world for investment incentives. We are also first in the world for inward investment by quality and value, and first for flexibility and adaptability of our people. Further, Ireland is among the top ten most innovative countries in the world. In particular, our workforce is well educated, willing to travel, agile and very ambitious. I believe that it is the quality of our people in Ireland that gives the country its edge in securing FDI and driving the successful growth of businesses that set up here.

Ireland is certainly a top priority for IQ-EQ, and the coming year will see significant expansion of our local service offering as we seek to satisfy the growing needs of our client base. As our sector continues to consolidate, the race is on to provide the highest quality of services to international investors and corporations; not only to stay ahead of competitor firms but to keep FDI coming to our shores over other international financial centres. At IQ-EQ we look forward to playing our part in accompanying investors on their Irish journey to continued success.