Friday 22 February 2019

Finance Ireland expected to float after mortgage move

The primary driver of house price rises remain wider economic conditions and the continued misalignment between demand and supply. Stock image
The primary driver of house price rises remain wider economic conditions and the continued misalignment between demand and supply. Stock image

Charlie Weston Personal Finance Editor

THE move by Finance Ireland into the mortgage market is expected to see the non-bank lender launch an initial public offering.

Run by former Permanent TSB boss Billy Kane, the company is being funded in its mortgage move by London-headquartered international asset manager M&G.

As it does not have a full banking licence, Finance Ireland does not have a deposit book as a source of funding.

Sources close in the non-bank lending sector said the move into mortgage lending would give it a broad-based position in the finance market here, and was set to see it eventually floated.

Finance Ireland is expected to establish itself quickly in the mortgage market here after it acquired a €200m residential loan portfolio from Pepper Money, the Australian-owned lender that has a base in Shannon.

The loan book comprises around 900 performing mortgages originated by Pepper in the last two years. The purchase price was not disclosed.

Finance Ireland has also acquired the IT platform and the underwriting expertise of Pepper, allowing it to scale up in the mortgage market quickly.

The lender is already a big player in the car finance market. It is part owned by the State's Strategic Investment Fund, and US investment giant Pimco. Around a third of the firm is owned by Mr Kane and the other managers.

Established in 2002, Finance Ireland now has strong market presence in the auto, SME, agri and commercial real estate finance sectors.

Last year, its new lending increased by 43pcc to €435m, with net revenue up by 54pc to €26.3m. It saw underlying profits rise by 226pc to €8.3m, according to analyst Diarmaid Sheridan of Davy Stockbrokers.

The total lending portfolio, including off-balance sheet assets, rose by 58pc to €668m. The mortgage portfolio acquired by Finance Ireland relates to Pepper's new origination business over the past two years. Pepper will continue to act as loan servicer to the portfolio together with new business originated by Finance Ireland.

Mr Sheridan wrote in a note for investors: "The acquisition of Pepper Money's mortgage business by Finance Ireland presents it with a ready-made route to enter the market."

There was no comment from the company when asked if it planned to float. But there is a strong expectation now that it will float on the Dublin and London markets.

Irish Independent

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