State plan to boost non-bank lenders hits snag as manager deal falls through
A government-backed plan designed to boost non-bank lenders has hit a snag after negotiations with a company that was to manage the project broke down, the Sunday Independent can reveal
The Ireland Strategic Investment Fund (ISIF) - managed by the NTMA - last year unveiled plans for a scheme called the Platform Investment Fund (PIF), which would invest in loans generated by "next generation platforms" (NGPs) like peer-to-peer lenders.
Guernsey-based SME funder GLI Finance was to be appointed as the manager of the fund, but talks were unsuccessful, an industry source told this newspaper. GLI Finance, which is AIM-listed, declined to comment, citing selective disclosure rules. An ISIF spokesman said: "The Strategic Investment Fund's policy is that we do not comment on any transaction discussions that may or may not be in progress. Investments that are made by the Strategic Investment Fund are fully disclosed in our annual reports."
ISIF had been hoping to scale the PIF up to as much as €200m, from an initial start of around €10m. "ISIF funding could be made available to such a fund on a commercial basis. Such a proposal would also benefit if a significant element of the overall funding was also provided from alternative private market sources. Where appropriate, the PIF may also obtain equity stakes in the businesses of the NGPs in order to increase the potential return from this initiative," an ISIF document relating to the PIF and seen by the Sunday Independent states.
"It is anticipated that the PIF would first carry out due diligence on individual NGPs before agreeing to fund loans originated through those NGPs. If necessary, the PIF may require the NGPs to modify their processes should they not meet the requirements of the PIF."
"The approach is similar to that taken by other institutional investors that now target investment in loans originated through such NGPs." The types of alternative providers seen as suitable for the scheme by ISIF include peer-to-peer lenders and invoice finance providers.
"The potential for such emerging NGPs to be used as a new channel to facilitate the extension of credit to the SME sector in Ireland is recognised ... there are a number of such new providers currently operational in the Irish market and the NTMA is also aware of other such emerging NGPs who have expressed an interest in entering the Irish market," the ISIF document says.
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