Ireland Strategic Investment Fund to finance 25,000 homes

The State's €5.4 billion investment fund could recruit the World Bank to help Irish companies seeking new markets after the UK leaves the European Union.

The Ireland Strategic Investment Fund (ISIF) launched a new strategy that included financing up to 25,00 new homes and backing companies looking to diversify following Brexit, which is timed for March 29th.

ISIF director Eugene O’Callaghan said the fund would provide long-term backing for businesses seeking to develop new products, and markets other than the UK, after it departs the EU.

Mr O'Callaghan added that the fund had signed a memorandum of understanding with the World Bank, which supports businesses in emerging markets, such as Asia and South America.

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“The idea around this is that we will be able to help Irish companies in accessing emerging markets,” he said.

Mr O’Callaghan explained that the fund hoped it would be possible to match Irish companies’ products and services with the needs of businesses in emerging markets that the World Bank supports.

The World Bank would not provide cash to Irish companies under the arrangement, Mr O’Callaghan stressed. “They may be a provider of capital to the businesses within the emerging markets,” he said.

The ISIF stands at €5.4 billion. Its management intends investing €500 million to €750 million annually over the next five years under its new strategy.

Longer-term purpose

Mr O’Callaghan said that post-Brexit finance would be for the longer-term purpose of helping companies cut their exposure to the UK. The fund would not provide immediate working capital.

ISIF puts a minimum of €10 million into a single investment, but often provides cash to organisations that allocate cash to businesses in smaller sums.

Kieran Bristow, head of investment strategy, said the fund hoped to finance 25,000 homes between now and 2025.

He stressed that the ISIF wanted to back the building of new homes. “Ideally we will be in the market at the more affordable end,” he said.

The State fund will take equity in housing projects and work with other investors.

Overall, the ISIF expects that the €500 million that it invests every year will attract a further €500 million to €1 billion in finance from private-sector partners.

The fund’s Irish investment commitments have grown to €4.1 billion as its phased transition from global portfolio to Irish portfolio continues.

Minister for Finance Paschal Donohoe, who attended the strategy launch, noted that the ISIF had helped create or retain more than 30,000 jobs.

Under the new strategy, the ISIF, managed by the National Treasury Management Agency, will target regional development, housing, indigenous businesses, climate change and Brexit.

In addition, the fund will continue to pursue investment opportunities for “connectivity”, which include existing investments in airport and port infrastructure and projects that enhance the Republic’s global data and IT connectivity.

Details of the new strategy were announced at ISIF’s sixth annual market engagement event, which took place at Convention Centre Dublin and was attended by more than 600 businesspeople, investors, project promoters and advisors.

According to Mr O’Callaghan, the fund will stick to its “double bottom line” mandate, that is to generate commercial returns and have a positive economic impact, including creating new jobs.