A company backed the State’s strategic investment fund has agreed a €30 million finance deal with auto maker Citroën’s Irish distributor.
First Auto Finance said at the weekend that it had agreed a landmark deal with IM European Motors, which distributes Citroen and DS vehicles in the Republic.
Under its terms, First Auto Finance will provide the funds needed by dealers to buy new and used passenger and commercial vehicles.
Along with this, the company will continue to provide finance to consumers and businesses buying Citroën and DS vehicles.
Neither side said how much the agreement was worth, but it is understood that it will involve a facility of about €30 million.
First Auto Finance is a subsidiary of Finance Ireland Ltd, established and led by Billy Kane.
The State-owned Irish Strategic Investment Fund (ISIF) and private equity player Pimco are key shareholders in Finance Ireland Ltd.
Frank Donnellan, First Auto Finance's managing director, described the new agreement with Citroën as a landmark deal.
“We have enjoyed a great working relationship with Citroën, IM European Motors and the Citroën’s dealer network for the past six years,” he said.
“This agreement copperfastens that relationship and represents a major milestone in our development.”
Chris Graham, managing director of IM European Motors in Ireland said the company was delighted with the First Auto Finance agreement.
“As we continue to grow our market share in the passenger vehicle and light commercial vehicle markets our dealers will have access to funding that will support our highly ambitious growth plans in this market,” he said.
First Auto Finance's sales director, Ray Murphy, noted that the agreement confirmed the company as a leading alternative to banks and other traditional forms of finance for dealers and car buyers.
The State established the ISIF to use the €7 billion left from in the National Pensions Reserve Fund following the bailout of the Republic’s banks to invest in new businesses.
The fund’s brief is to invest on a commercial basis in businesses that will create jobs and support economic activity in the Republic. It now has €8 billion under its management.
Pimco is a US-based private equity group. It is one of a number of such businesses that stepped up their activities in the Republic following the recession.
Citroën has a market share of just under one per cent, with 1,285 new cars registered so far this year. That’s out of a total new-car market of 130,515 up to the end of October. Its DS brand – a relatively recent attempt to create a premium offshoot – recorded just 35 registrations in the same period. The French brand also sold 1,411 commercial vehicles, where it has a more substantial 6 per cent market share.