Finance Ireland secures €30m from State investment fund

Investment gives agency 32% stake in SME lender led by former PTSB chief Billy Kane

Billy Kane, former PTSB chief executive, set up Finance Ireland in 2002. Photograph: Eric Luke

Billy Kane, former PTSB chief executive, set up Finance Ireland in 2002. Photograph: Eric Luke

 

The Ireland Strategic Investment Fund (Isif) has announced plans to invest €30 million in equity into Finance Ireland, the country’s biggest non-bank lender.

This will give the State agency a 32 per cent shareholding in Finance Ireland, which is led by former Permanent TSB chief executive Billy Kane.

Isif will also nominate two directors to the company’s board – its head of private equity Fergal McAleavey and Ian Black of the National Treasury Management Agency.

This is another significant investment for Finance Ireland, which secured €25 million in backing last year from global investment firm Pimco, which has a similar holding to Isif.

Finance Ireland also has a €51 million senior debt facility with the Strategic Banking Corporation of Ireland, another State agency.

Isif’s investment values Finance Ireland at about €90 million.

Set up in 2002 by Mr Kane, Finance Ireland provides funding to the SME, agri, motor and commercial real estate (CRE) sectors.

The lender already works with Isif in respect of the €100 million MilkFlex Fund, which provides low interest rate loans to Glanbia dairy farmers.

New lending

“We are very well capitalised and with the balance sheet that we now have, it will enable us to lend close on €1 billion over the next three years, and we may well exceed that,” Mr Kane told media at an event to announce the investment.

The company has expanded its operations this year with the addition of 40 staff, bringing its head count to 85 across its four operating divisions. Mr Kane expects to add another 30 employees over the next 18 months.

Latest accounts for Finance Ireland show it made a profit of €2.7 million on revenue of €14.7 million in 2015.

Mr Kane said Finance Ireland had provided loans to more than 2,000 SMEs at an average value of €50,000 up to the end of October. He said rates can range from 5.6 per cent to 7.5 per cent for SME lending and about 8 per cent for car finance, where it has a 12 per cent market share.

Isif director Eugene O’ Callaghan said it was attracted by the opportunity to support an “established and experienced management team” to grow its SME and agri-leasing businesses. This is Isif’s fifth equity investment and its largest to date.

Finance Ireland was advised on the deal by Goodbody Corporate Finance.