Arrow Global set to buy up distressed Irish mortgages

Manchester-based debt investor in talks with banks about long-term investment in bad loans

 John Moran, former secretary general of the  Department of Finance, is involved in the talks between Arrow Global and AIB. Photograph: Alan Betson/The Irish Times

John Moran, former secretary general of the Department of Finance, is involved in the talks between Arrow Global and AIB. Photograph: Alan Betson/The Irish Times

 

International debt investor Arrow Global has begun talks with Irish banks about financing investments in non-performing Irish mortgages, The Irish Times understands.

The UK investment house, which is based in Manchester, held talks in recent weeks with AIB, which has one of the largest levels of non-performing debts among the Irish banks.

It is understood that former Department of Finance secretary general John Moran, who has worked with Arrow Global before, is involved in the talks, as is David Hall, the chief executive of the Irish Mortgage Holders Organisation (IMHO).

Mr Hall has previously completed a deal with AIB, which is backing his iCare housing charity. The not-for-profit completed its first deal for 19 houses with backing from AIB earlier this month.

Private sector clients

Since leaving the Department of Finance, Mr Moran has worked with several private sector clients regarding their investments in Ireland, most notably ride-sharing platform Uber and Japanese financial services company Nomura.

A source with knowledge of the talks said that Arrow Global was seen as a potential long-term investor in Irish debt, and potentially a supplier of “patient capital”. This would stand in contrast to the funds that have bought distressed Irish debt in recent years, many of whom have investment timelines of no more than three to five years, and focus on making extremely high levels of return to reflect the riskiness of the assets they have invested in.

When contacted, Mr Moran said that a solution to the problem of Irish banks’ distressed mortgage debt was something that “doesn’t get solved quickly, and finding a provider of long term capital is an important part of [solving the issue]”.

Arrow Global entered the Irish market in 2017, when it purchased Mars Capital, the loan servicing platform previously owned by US investment house Oaktree.

Wider push

At the time, the investment house was reported as saying it intended to “build on the existing platform” as part of a wider push into the Irish market. When asked for comment, Arrow Global said that it does not comment on market speculation.

A spokesman for AIB said that the bank has “a track record of developing innovative solutions for customers in difficulty such as the iCare Mortgage to Rent scheme, a joint initiative with IMHO.”

The bank has reduced non-performing exposures (NPEs) – or bad loans – from a peak of €31 billion to €7.2 billion in September 2018. “Approximately 90 per cent of this reduction has been achieved through working with customers on a case-by-case basis with a view to reaching sustainable solutions, some of which have involved significant debt write-off,” the bank spokesman said.