Thursday 29 September 2016

€7.9bn national investment fund has put no money into social housing

Published 22/04/2016 | 02:30

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The Irish Strategic Investment Fund (ISIF) hasn't invested in any social housing as no options brought to it have been commercially viable, it claims.

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The €7.9bn fund said a number of groups from both the public and private sectors have come forward looking to invest in social housing.

The National Treasury Management Agency-run fund was set up in December 2014 with a statutory mandate that it must invest on a commercial basis to support economic activity.

ISIF director Eugene O'Callaghan did not rule out investing in social housing in the future and acknowledged "it is a significant issue for the country".

"There have been numerous working groups both in the public sector generally and also involving some private sector interests who would like to be involved in financing and development of social housing and the various approved housing boards and so on," he said.

Mr O'Callaghan said it is "definitely quite possible" that the fund will invest in social housing in the future.

"I would say there is a huge momentum in the system generally to try to deal with the social housing problem."

ISIF aims to have the entirety of the fund deployed by 2020, having committed over €2bn by the end of 2015. In 2016, the state-backed fund will look to invest roughly the same amount it did last year.

Diversify

However, in 2015 the fund invested €325m of the annual €759m spend in Activate Capital. This time round Mr O'Callaghan expects more diversified investments.

Mr O'Callaghan was speaking at the third annual market engagement event in the Convention Centre in Dublin.

When asked about the fund's investment into SME lender BMS Finance Ireland, he said the firm takes much higher risks in its lending and that there has been plenty of demand for its product in the UK.

"The Strategy Banking Corporation Ireland (SBCI) would be the primary answer for that. We're looking to provide capital where there are gaps that can be filled and there's definitely an equity type gap of which BMS would be an example," he said.

The fund remains confident of its investments even with the potential of a British exit from the EU looming large.

ISIF head of investment strategy Kieran Bristow said the companies it has backed will be able to adapt to changing circumstances.

"We have to invest in a long-term broader view so the companies we invest in we believe will remain competitive and adjust their business model whatever happens," he said.

The average investment size by the fund is between €30m and €40m and it knows it needs to up the amount it's allocating if it is to meet its targets.

Of the €2.3bn invested so far just €30m has been spent on food and agriculture. However, the fund says it has a strong pipeline in the area.

Irish Independent

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