London-based investment firm Chenavari trebled its stake in Dilosk late last year to almost 30 per cent, as the Irish mortgage lender seeks to grow in 2019 by acquiring loan books and moving beyond buy-to-let lending into the providing finance to owner occupiers.
Speaking to The Irish Times after Dilosk completed the sale of €210 million bonds to refinance a portfolio buy-to-let mortgages it issued in recent years, chief executive Fergal McGrath confirmed the company aims by the end of the year to provide residential mortgages, and buy another portfolio of loans.
“We’d have a very strong appetite to buy performing and ‘reperforming’ loans,” Fergal McGraths said, adding that both mainstream banks, which are under pressure to lower their non-performing loans ratios, and overseas investment firms, which snapped up Irish mortgage books in recent years, are the targets.
Dilosk, which started off in 2014 with the purchase of Bank of Ireland's ICS Mortgages brand and a €223 million portfolio of loans, has since acquired two further books. These comprise the purchase in 2017 of €160 million of owner-occupier loans handed out by US group GE Capital's former Irish subprime business before the financial crisis, and the acquisition last year of €182 million of mortgages written by Leeds Building Society before it quit the market.
Dilosk currently has a total portfolio of about €620 million of mortgages. Its own lending focus to date has been in the buy-to-let space.
Mr McGrath said that the success of the bond deal this month – its third such transaction – “puts us on a nice footing” as it plans to enter the market for owner-occupier mortgages in the second half of 2019.
Chenavari, which made an initial investment in Dilosk in 2017, increased its stake late last year from 10 per cent to 29 per cent, according to Mr McGrath, who declined to give financial details. Another UK group, Attestor Capital, saw its holding dip slightly from 19.8 per cent to 17 per cent as part of the funding round.
Mr McGrath, his brother Oran, and fellow Dilosk directors Ray McMahon and Pierre-Antoine Joly lead a small group that still own a controlling 54 per cent stake in the business.
All told, Dilosk has raised €700 million through three bond refinancings – or securitisation deals – since 2015. Mr McGrath said prospective bond investors had to “get their head around” Sinn Féin’s No Consent, No Sale Bill 2019, which seeks to stop lenders selling mortgage books on without borrowers’ approval.
The Dilosk chief executive said he told investors that he expected the Bill would not be passed in its current form and, in the event it were enacted, there would likely be exemptions for “capital markets funding”.
Mr Doherty told an Oireachtas finance committee hearing last week that the final legislation, if enacted, would exclude loans that are securitised or put up for refinancing through the sale of asset-backed securities.