New estimates from our research database show that domestic fee income in the Irish SPV services sector reached €350m in 2019. This is a rise of €32.5m from 2018 and represents a 10.3% expansion over the course of the year.
The Irish SPV services sector consists of all the services provided domestically to special purpose vehicle structures in Ireland. This includes legal services, tax structuring, statutory audit, tax compliance, investment management, corporate administration, listing agent services, loan servicing, fund administration and directorship services.
Our estimates are based on tracking the sustained underlying growth in the number of active SPVs in Ireland, which are currently rising at a rate of approximately 240 per year. This increase is a net figure and does not consider liquidations, which we estimate to be around 100 per year.
On average, each SPV purchases around €135,000 in domestic services each year. There is significant variation around this figure, with many SPVs requiring a greater amount of services due to their business model. Some structures are more complex overall, and require a higher input across several service categories. In particular, we have identified SPVs requiring loan servicing and investment management services as two key areas where domestic fees are significantly higher.
Retained securitisation deals provide a typical example of this: Mortgage loans may be securitised by a bank, who wishes to obtain secured funding for the most senior tranches of the securitised debt. In many cases, the bank will provide loan servicing for the mortgage portfolio, charging the SPV market rates for these services.
Investment management services are charged to the SPV in exchange for managing the qualifying assets of the vehicle. Ireland has seen the influx of several investment managers in recent years, along with many homegrown investment firms entering the market.
If recent trends continue throughout 2020, we are likely to see the domestic market for SPV services rise to over €380m per year.
Our research database has been developed using annual financial statements from around half of all Irish SPVs. This data is updated as new accounts are released and informs a granular, bottom-up picture of the sector. Contact us at [email protected] for research enquiries.