Business Irish

Wednesday 24 April 2019

Profits surge at Finance Ireland as lender eyes up an IPO next year

Finance Ireland CEO
Finance Ireland CEO
Gavin McLoughlin

Gavin McLoughlin

Profit before tax grew 27pc at Finance Ireland last year, with the non-bank lender looking at a potential 2020 IPO.

The company, run by former Irish Permanent chief executive Billy Kane, is also considering possible acquisitions of rivals.

A number of new non-bank lenders have sprung up in recent years here, but Mr Kane said he expects the market to consolidate.

"In the non-bank lending space I think a time will arrive, whether it's this year or next year, where there will be consolidation. Ireland is a small market," Mr Kane said.

Pre-tax profits at the company hit €10.5m last year, with new lending rising 13pc to €491m. The company has a large motor finance business, an SME-lending arm, and an agri-focused arm among its divisions.

Mr Kane said a stock market flotation of the business would not take place this year, but added the company would "certainly consider it" in 2020.

"In terms of companies like ours that need access to capital from a diversified base, there's no doubt about it that being on a market like that gives you instant access."

The company recently announced it was entering the mortgage market, with products to be made available via brokers.

Finance Ireland is sourcing the money for the mortgages from investment giant M&G.

Its motor finance arm, First Auto Finance, is a provider of so-called personal contract plans (PCPs) to car buyers.

PCPs involve a purchaser paying a deposit towards a car, then making a monthly repayment for a period of time until a larger "balloon payment" arises.

At that stage the consumer has options, including buying the car outright by paying off the balloon payment, or handing back the keys if they meet certain conditions in areas that typically include the amount of mileage covered.

Questions have been raised about whether PCPs are value for money, but First Auto boss Frank Donnellan said they have seen a resurgence in the plans after a drop-off caused by negative coverage.

"We've always said that for the right person it's the perfect way to acquire a new car," Mr Donnellan said.

Irish Independent

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