Irish investment management firms are out of the running for a lucrative contract to handle up to €15 billion of back taxes and interest the State has been ordered to collect from Apple, as they fail to meet a key qualifying condition.
The National Treasury Management Agency (NTMA) launched a search on Wednesday for asset managers to take care of the money as it is held in escrow while the Government and Apple appeal a 2016 European Commission decision that Apple received €13 billion in illegal state aid in the decade to 2014.
The Government has committed in the meantime to collecting the money, having missed an initial deadline set for early January as it continues to align the European Union’s formula with Irish tax law and work through other legal matters relating to the setting up of an escrow account.
The NTMA document shows that investment firms interested in the Apple escrow account contract must have at least €500 billion of assets and €100 billion of bond investments under management as of the end of 2016 to qualify. That would rule out all domestic Irish investment firms, who fall well below the thresholds.
However, Dublin-based Pioneer Investments would qualify, having been taken over by Amundi Asset Management group in France in July. The wider group manages more than €1.3 trillion of assets, with the Dublin-based business a specialist in bond investments.
By contrast, Irish Life Investment Managers, which was the State’s largest domestic asset manager before its 2013 takeover by Canada’s Great-West Lifeco, currently has about €50 billion of assets under management, according to its website. Still, its parent has a total of $1.2 trillion (€1 trillion) of assets under management, including its Irish Life unit.
“It is intended that the fund will be denominated in euro and will be invested in low-risk, fixed-income securities, with the principal investment objective being to preserve capital to the extent possible in light of prevailing market conditions,” according to the NTMA procurement documents.
“It is envisaged that the fund will be beneficially owned by the Minister for Finance for the duration of the arrangement, subject to the escrow rights and obligations of the Minister and Apple.”
The NTMA has set a deadline of September 19th for expressions of interest for the contract, with a final award being made in mid-November.
Separately, the NTMA started a procurement process in July for a custodian, which will safeguard the Apple money as it is held in escrow and managed by an investment manager. This contract, also set to be awarded in the middle of November, is open only to companies with at least $3 trillion of assets under custody in each of the past three years.
Industry sources have previously estimated for The Irish Times that the investment managers and custodians stand to make up to a combined €15 million a year from the two contracts.
They said that the successful custodian could generate annual fees equating to 0.03 percentage points of the funds, while investment managers could expect to receive an average of up to 0.07 per cent of the assets, assuming the funds would be subject to a mix of active and passive management.