Dilosk explores deal options in shifting mortgage market

Fast-growing Irish lender in talks with its investment banks

Dilosk founders Fergal and Oran McGrath. Photo: Naoise Culhane

Jon Ihle

January 27 2022 02:30 AM

Fast-growing mortgage lender Dilosk, the owner of ICS Mortgages, is in talks with its investment banks regarding a possible transaction, the Irish Independent has learned.

It is not clear whether a deal will involve raising equity or could potentially see minority shareholders exit.

Founders Fergal and Oran McGrath increased their combined stake in the non-bank lender to just over 50pc last month.

Sources close to the situation confirmed the company was involved in talks with banks about a fundraising transaction.

However, industry sources said Dilosk’s coveted mortgage lending licence and established relationship with mortgage brokers could flush out potential buyers especially at a time when the loss of KBC Bank and Ulster Bank creates a clear gap in the market. A spokesperson for Dilosk said the company does not comment on rumour or speculation.

Rival Avant has already been mopping up some of the estimated €2.5bn in annual business being left behind by the departing retail banks, passing Dilosk in market share.

Dilosk, which entered the Irish mortgage market in 2014 with the acquisition of ICS Mortgages from Bank of Ireland had been aiming to write €450m in new mortgages last year.

However, multiple market sources estimated the firm managed less than €390m, despite continuing to grow its book at a strong clip.

Avant, backed by Spain’s Bank Inter, has access to super-cheap funding which allows it to price keenly and cherry-pick prime customers.

Dilosk rivals Finance Ireland and then Avant launched 20-year fixed-rate mortgages last summer, highlighting the competition and innovation in the part of the mortgage market where lenders are chasing top-rated borrowers.

Nonetheless, Dilosk has a high-quality back book including lucrative buy-to-let mortgages and a growing proportion of owner occupier loans, which are distributed by increasingly influential mortgage brokers.

Its most recent securitisation of loans written in 2021 had an average loan-to-value ratio of about 70pc, indicating premium borrowers.

With other management, directors and family members, individual owners control 66pc of the company, a spokesperson said.

Latest company accounts show the remaining shares are divided between private equity fund Attestor Capital via its Trinity Investments vehicle and Luxembourg-based Areo.