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Monday 16 December 2019

State-backed SME lender BlueBay seeks extra time to invest its funds

So far €300m has been loaned to businesses, the Irish Independent understands.
So far €300m has been loaned to businesses, the Irish Independent understands.
Donal O'Donovan

Donal O'Donovan

THE State-backed lender BlueBay Asset Management needs more time to fully invest the €450m it raised to lend to Irish business in 2013, in the latest sign that massive efforts to source non-bank credit for SMEs has yet to catch on with business borrowers.

BlueBay raised €450m, including from biggest backer the National Pension Reserve Fund (NPRF), with a target to lend the cash over five years. The lender is focused at the bigger end of the small and medium enterprises (SME) market, advancing term loans of between €5m and €45m to Irish companies.

Its deals have including helping fund TV3's acquisition of its own loans at a reduced price from the liquidators of the former Anglo Irish Bank.

So far €300m has been loaned to businesses, the Irish Independent understands. That leaves the business sitting on a big cash pile, made up of €150m of the original fund along with cash from the early repayment of some loans, including TV3's when that business was sold to Liberty Global.

BlueBay's Irish fund was set up with a seven-year life span, which meant it was likely to lend out cash over five years and return the cash and profits to investors at the end of the seven-year cycle.

The fund can make new business loans, buy loans from banks that are exiting the market or refinance loans for clients,

In a note to the Irish Stock Exchange, BlueBay said it is now planning to seek bondholder approval to extend the maturity date of all classes of its bond debt to June 15 2022, and to push out its reinvestment period to June 14, 2019.

The moves, along with a request to reduce some margins and lower the minimum denomination of the bonds themselves, will require formal noteholder consent.

The move to extend the reinvestment period in particular means BlueBay will continue to be able to offer five year term loans. If the extension is rejected, the fund will be forced to offer ever shorter repayment periods to prospective borrowers. The changes won't have any impact on the NPRF's successor, the Ireland Strategic Investment Fund (ISIF).

Bluebay was one of three funds backed by the NPRF in an bid to get capital to SMEs. The others were an Irish venture with UK based Better Capital, that shut in 2014, and a joint venture of private equity giant Carlyle and Cardinal.

Carlyle Cardinal Ireland remains active in the market.

Irish Independent

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