Business Irish

Thursday 23 November 2017

Veteran banker Mark Duffy's LoanBox set to seal €350m in backing

Mark Duffy CEO of Bank of Scotland Ireland
Mark Duffy CEO of Bank of Scotland Ireland
John Mulligan

John Mulligan

Veteran banker Mark Duffy, who once headed Bank of Scotland's Irish arm, is close to finalising as much as €350m in funding from US and European investors for a new major commercial lending venture in Ireland, the Irish Independent has learned.

Mr Duffy and a band of former bankers, including people who also worked for Bank of Scotland here, plan to use the funds to facilitate up to €1bn in commercial lending to the Irish market over the next three years, it's believed.

The plan is to challenge the pillar banks including Bank of Ireland and Allied Irish Banks.

The new venture is called LoanBox, and will use the funds to offer finance alternatives in Ireland, both north and south. It's a subsidiary of Dublin-based company European Asset Resolution Partners (EARP), which was founded by Mr Duffy about 18 months ago.

Mr Duffy is chief executive of EARP, which has so far been largely active in Spain and Portugal. It buys non-performing loans, typically from banks, and works with borrowers on a consensual basis to work out those loans. It also offers an opportunity to buy the loans back.

EARP is backed by Swedish businessman Gunnar Dahl. Mr Duffy set about raising €100m for EARP in 2013 when the business was founded. Mr Dahl is also involved in LoanBox, which has been actively hiring staff for its Irish base.

A prospectus being circulated to potential investors in the US and Europe, and seen by the Irish Independent, indicates that LoanBox will help Irish borrowers to finance the purchase of their loan from an investment fund operator such as private equity outfits Lone Star, Apollo or Blackstone. It will also enable performing borrowers to secure loans to expand their businesses.

It will focus on deals ranging between €5m and €25m. LoanBox won't directly act as a lender, but rather as a facilitator for the investors providing the financial backing.

LoanBox is set to focus on sectors including hospitality, buy-to-let and commercial real estate, and may expand beyond those segments.

It's believed that the funding round for LoanBox has been significantly oversubscribed and that it will raise between €300m and €350m. The first funding close is expected to take place at the end of July. LoanBox management are also investing in the business. Mr Duffy, who ran Bank of Scotland here from 1999 to 2009, was unavailable for comment this week. EARP also declined to comment. Bank of Scotland left Ireland in 2010.

Global investment businesses such as Lone Star have invested heavily in Ireland during the past few years, snapping up huge tranches of mortgages and other loans.

But global property firm Cushman Wakefield said in a recent report that there has been a "notable increase" in the number of so-called secondary sales in the European market as early investors in non-performing loans start to "cash in" on portfolios that they've worked through. Such secondary sales give entities such as LoanBox an opportunity to enter the loan market.

The prospectus for LoanBox also indicates that the company perceives a longer term opportunity for the business in Ireland, rather than being just a short-term solution.

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