ICS Mortgages parent, Dilosk, has agreed to sell itself to Pepper Advantage, the loan services provider used by investment firms and banks, for an undisclosed sum.
The deal will mark a return by Pepper to providing Irish home loans, having sold its previous mortgage portfolio – amounting to €200 million at the time – in 2018 to Finance Ireland.
Dilosk has a €1.7 billion mortgage book, much of which has been refinanced in international bond markets through so-called residential mortgage-backed securitisation deals.
It has also stoked hopes that ICS, whose owner-occupier rates have been among the highest in the market in recent years – due to its reliance on market, rather than cheap deposits funding – will become a more competitive force.
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“This is really good news for the mortgage market and for customers,” said Trevor Grant, a director of Affinity Advisors and chairman of the Association of Irish Mortgage Advisors. “It should give ICS access to greater resources, funding and systems, to improve its offering.”
Pepper, which is owned by a US private equity firm JC Flowers, expects to complete the deal by the end of September, subject to regulatory approvals.
It plans to continue to run the business under the ICS Mortgages brand, with its existing management team and regulatory framework.
Sources said that ICS will become a platform or service for institutional clients of Pepper to fund home loans, rather than Pepper itself – avoiding the potential for the company to be seen as competing with its banking customers.
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“This transaction represents a highly positive outcome for Dilosk, our customers, our investors and our colleagues. Becoming part of the Pepper Advantage global business marks an exciting new chapter for the company,” said Fergal McGrath, chief executive and co-founder of Dilosk.
“Its strong technology platform, deep client relationships, and long‑term investment approach align strongly with Dilosk’s strategy and will support our ambition to continue building a leading Irish mortgage provider and servicer.”
[ Dilosk completes €230m securitisation deal on by-to-let loansOpens in new window ]
McGrath and his brother, Oran, Dilosk’s chief operating officer, own 57 per cent of the business, according to Dilosk’s latest Companies Registration Office (CRO) filings. Almost 20 per cent is in the hands of UK-based Attestor Capital, just under 10 per cent owned by Chenavari Investment Managers in London, with the rest held by other senior executives and early backers.
Pepper is acquiring 100 per cent of the shares, with the deal involving an earnout for selling investors, subject to certain targets being met, according to sources.
Dilosk continues to have another big institutional investor, UK-based Attestor Capital, which owns almost 20 per cent through an entity called Trinity Investments.
Fraser Gemmell, group chief executive of Pepper, said: “By welcoming Dilosk into the group, we are deepening our credit access capabilities, diversifying our business in Ireland, and scaling the reach of our credit management platform. It will strengthen our ability to offer institutional clients more ways to access credit opportunities supported by market-leading analytics and oversight, in addition to expanding our European assets under management.”
Dilosk, which was established in 2013 and purchased the ICS Mortgages brand and a small portfolio of loans from Bank of Ireland a year later, moved beyond its initial focus on buy-to-let mortgages and into the owner-occupier space in late 2019.
Pepper Advantage Ireland’s chief executive, Niall Sorohan, told The Irish Times in May that it was looking to develop new lines of business to diversify as the post-crisis era of large non-performing portfolio sales fades.
He said that the firm, which entered the Irish market in 2012 and is best known for servicing mortgages secured by collateral, plans to launch a new business – called Harbour Credit – aimed at managing unsecured consumer credit for banks, utility firms and semistate agencies.
Pepper also plans to work closely with its sister company in the UK on offering institutional investors in non-banks and credit funds a service to provide independent oversight of their investments, he said.
The most recent set of accounts for Pepper Advantage Ireland shows that its assets – mainly comprising mortgages – under management fell to €20.4 billion at the end of 2024 from €22.8 billion a year earlier, driven mainly by borrowers paying down debt and some portfolio disposals by clients.
