Monday 26 August 2019

BoI set to close €200m client fund

BoI boss Francesca McDonagh.
BoI boss Francesca McDonagh.

Gretchen Friemann

Bank of Ireland is on course to complete a €100m fund raise for a new flagship investment fund set up in partnership with KKR, the global buyout firm.

It is understood the lender has attracted sufficient commitments from clients to conclude the deal by the end of the month.

The successful fund raise marks an important milestone for Bank of Ireland's private arm as the first such venture since the crash hit almost a decade ago.

However expectations that wealthy clients would stump up commitments of €1m to €3m each, typical in the pre-crisis era, proved wide of the mark. The average investment into the new fund is €400,000 to €500,000, according to sources familiar with the matter. These smaller than anticipated individual commitment means a far larger number of investors has signed up to the new Diversified Private Markets Fund.

Bank of Ireland Private, which was merged with the group earlier this year, sourced capital for the venture from its own clients and from elsewhere in the group. It is understood a parallel fund, housed within Bank of Ireland Life, has helped bolster the new vehicle.

Bank of Ireland Life is run by Seán Ó Murchú, the former head of the private bank.

The anticipated conclusion of the fund raise comes amid a worldwide shift into alternative assets like private equity as investors hunt for better returns in a low interest rate environment.

The Bank of Ireland/KKR venture also underscores the depth of appetite among well-heeled Irish retail investors for a sector dominated by institutional and ultra wealthy worth investors.

In exchange for locking up their cash for ten years, the clients receive an illiquidity premium with the annual return expected to range between 10 and 12pc.

KKR recently revealed a drop in its third-quarter profits, compared with the same period last year, but the buyout behemoth also unveiled a 17pc expansion in assets under management, to US$153bn.

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