Wednesday 14 November 2018

Finance Ireland raises €30m to boost expansion

Finance Ireland’s Billy Kane
Finance Ireland’s Billy Kane

Gretchen Friemann

US funds giant Pimco and the State's sovereign wealth fund, ISIF, have agreed to pump a further €30m into Finance Ireland, the alternative lender set up by former banker Billy Kane.

The move comes as the rapidly expanding financial services firm eyes a near €200m securitisation of its commercial mortgage book, as first reported by this newspaper.

A spokesperson declined to comment on the equity raise but the Irish Independent understands Pimco and ISIF have agreed to commit a further €15m each to the business.

The cash injection comes as non-bank lending in Ireland continues to boom as a plethora of private firms rush to fill the void left by the traditional banks by providing tailored loans to consumers and small- to-medium companies.

In the past Mr Kane has spoken of his ambition to grow Finance Ireland into a challenger bank and potentially list the group on the stock exchange.

While that target remains at least two to three years down the track, sources said this latest fund-raise is unlikely to be the last. The additional equity from Pimco and ISIF is expected to lift Finance Ireland's net assets to €110m from a previous value of €80m and sets the specialist lender on course for greater growth.

Pimco injected €25m into the group in 2015, a sum that was matched by €30m from ISIF.

Mr Kane, a self-confessed opportunist, initially drove Finance Ireland's expansion via a car-financing unit, underwritten by the UK merchant bank, Close Brothers, but has diversified the business since then, forging into asset financing, agri financing as well as commercial real estate lending.

The unit, headed by Ken Murnaghan, a former head of business banking at Ulster Bank and a senior executive in AIB's corporate banking division, has grown swiftly since its launch in 2016 and is now eyeing a €200m securitisation or bond issuance within the next six months.

Speaking to the Irish Independent earlier this year, Mr Murnaghan said a deal was "likely", adding their "assumption is that our growth and loan profiles should be securitisation friendly".

But he pointed out that there are "no benchmark Irish trades for a deal like this".

Last year Permanent TSB achieved an effective negative yield on a $500m bond backed by mortgages.

Specialist lender Dilosk has also issued bonds backed by home loans while First Citizen Finance, became the first Irish firm to enter the auto securitisation market with a €158m bond.

Finance Ireland's commercial property loans are largely targeted at SMEs and consumers.

Irish Independent

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