US bank enters Irish market to back technology

A NEW lender is to enter the Irish banking market following the announcement that Silicon Valley Bank is to lend $100 million (€78.7 million) to technology companies over a five-year period.

The move is part of a collaboration with the Irish Government, which will invest $50 million into technology-focused funds managed by SVB Capital, a division of SVB, through the National Pensions Reserve Fund (NPRF).

Eugene O’Callaghan, a director at the NPRF, the body which manages the country’s debt and invests in a range of asset classes, said the decision to invest in the SVB fund was made “entirely commercially”.

The NPRF sold existing venture capital investments in order to fund the SVB investment.

According to Greg Becker, president and chief executive of SVB, its funds give “very unique access to the best venture capital funds in the world”.

Silicon Valley Bank is a niche bank that provides banking facilities and services to companies in the technology sector.

As well as providing regular banking facilities to technology companies, it also offers term loans and working capital to early-stage companies which are not necessarily targeted by mainstream banks.

Founded in California 30 years ago, SVB has 27 offices worldwide and a presence in China, India, Israel and the UK.

It has already worked with around six Irish technology companies, including Openet, the winner of last year’s Ernst Young Entrepreneur of the Year competition, and it has extensive contacts within the Irish venture capital industry.

Somewhere between 50 and 100 Irish technology companies could be eligible for the bank financing.

Because SVB is only engaged in lending, it is not required to apply for a banking licence in Ireland.

Last week the company opened its first, full-service commercial bank branch outside the US in London.

SVB said there were no specific plans to extend its presence in Ireland to become a full-service retail bank, though it may consider partnering with another local bank who could provide day-to-day banking services.

The bank plans to retain a local representative to work directly with targeted businesses in Ireland. The NPRF will also help the bank to identify potential clients in the sector.

Mr Becker said that while the company had already considered locating in Ireland, the involvement of the NPRF had “kick-started” the process.

He praised the “proactive” approach of the Irish Government in encouraging new businesses to enter the market. The collaboration by the NPRF with Silicon Valley Bank is the latest in a number of moves by the NPRF, which is part of the National Treasury Management Agency, to invest in assets of strategic importance to the Irish economy.

The NPRF’s Irish Infrastructure Fund, which aims to invest up to €1 billion in Irish assets, earlier this week made its first investment through the acquisition of a majority stake in a portfolio of wind farms from the Viridian Group.