Business Irish

Sunday 18 August 2019

Isif set to rein in investment after €300m injection

Growing private capital market to slow funding from State-backed body, writes Michael Cogley

ISIF director Eugene O'Callaghan
ISIF director Eugene O'Callaghan

The Ireland Strategic Investment Fund (Isif) will slow its capital deployment in the second half of the year due to the growing level of money available from private sector sources.

The State-backed body committed €300m in funding in the opening six months of 2019, according to its latest financial update. Isif has part-funded projects in Ireland worth €842m in total so far this year.

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Established in 2014, Isif aims to provide a commercial return, as well as a positive economic impact, for the country. It has recorded returns of 3.1pc so far this year, and €859m in value since its inception five years ago.

Isif director Eugene O'Callaghan said the fund's performance was "solid" against the backdrop of a low interest rate environment.

"The fund's key differentiators are its flexibility, long-term nature and status as trusted sovereign partner to businesses and co-investors, and these represent strong foundations on which we can continue to make a meaningful and positive impact in the Irish market," he said.

"Of particular resonance in H1 2019 was our commitment of €295m across our priority themes of regional development, housing, indigenous businesses, and climate." Part of Isif's investment strategy is to back the development of 25,000 new homes by 2025. Its €140m investment in the Irish Life Investment Managers private rental sector fund in April was part of that strategy.

Isif's investments now support more than 32,000 jobs. The proportion of these allocated to construction has risen significantly over the years. In 2015, construction employment accounted for 1pc of all jobs backed by Isif. That rose to in excess of 26pc in 2018.

In a presentation on its results, Isif said that it had "altered course" in response to evolving economic conditions.

Overall, jobs backed by the fund jumped by 1,282 last year. Around €2.2bn worth of turnover was supported through Isif's investments, while the wage bill remained flat at €948m.

However, exports backed by Isif dipped last year by €46m to €485m.

Isif's investment in the Irish fund Life this year represented its largest backing. The insurance giant's investment arm is focusing on private rental sector properties and last year completed the acquisition of 262 apartments at the Fernbank development in south Dublin.

The fund has now "realigned itself" across five themes of investment following instructions from Finance Minister Paschal Donohoe.

Regional development, housing, indigenous business, climate change, Brexit, and national initiatives now all take precedence in the fund's decision-making.

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