Swedish corporate finance house to invest millions in Irish firms

Proventus prepared to lend up to €100 million

A water display on the Liffey by the Dublin Port tugs after the signing of a contract by Gaelectric Holdings to co-develop three Irish wind farms in 2011. Stockholm-based Proventus recently loaned €65 million to green energy developer Gaelectric. Photograph: Dara Mac Dónaill

A water display on the Liffey by the Dublin Port tugs after the signing of a contract by Gaelectric Holdings to co-develop three Irish wind farms in 2011. Stockholm-based Proventus recently loaned €65 million to green energy developer Gaelectric. Photograph: Dara Mac Dónaill

 

Swedish corporate financier Proventus, whose backers include the Nobel Foundation, is seeking to invest up to €100 million in individual Irish companies as it moves to fill a gap left by low levels of bank lending here.

Stockholm-based Proventus, which manages funds of about €1.1 billion, recently loaned €65 million to green energy developer Gaelectric, which is spending €250 million on building a series of wind farms around Ireland.

Yesterday, Proventus chief executive Daniel Sachs confirmed his firm is looking for other opportunities in Ireland and has been taking soundings from banks and corporate advisers.


Good companies
“We have been looking at Ireland and we believe that there are good companies here that have potential and need funding,” he said, adding that the limited amount of bank finance available here has left a gap in the market that Proventus can fill.

Proventus loans anything from a minimum of €10 million to a maximum of €100 million to individual companies and generally invests between €300 million and €400 million a-year.

Mr Sachs said the firm has not earmarked a specific figure to invest here, but suggested that it could reach “a few hundred million” over a period of years.

Proventus loans money to its clients, either through bonds, guarantees, direct lending, or whatever structure suits the circumstances, and generally works with mid-size companies seeking to restructure or expand.

Its chief executive explained that its investments typically “sit between equity and bank debt” and tend to be for the longer term rather than geared at an early exit.

The firm takes on more risk than the banks, and thus will seek a greater return for its money, but tailors this so that there is no interference with shareholder’s interests or upside.

In terms of criteria, it looks for companies with an established market position that can generate strong cash flow or have good assets.

Mr Sachs said that it does not have a preference for particular sectors.

Its current investments include UK travel business Thomas Cook, which it took on board last year.

It also provided finance to sports equipment manufacturer Head, which recently reported that last year it earned profits of €2.4 million on sales of €147 million.

It is one of a number of bondholders in Scandinavia’s biggest refinery operator, Preem Corral Petroleum, based close to Gothenburg in Sweden, and was involved in a major refinancing of part of its debt in 2011.

Of the €1.1 billion under its management, around 20 per cent of that figure is the firm’s own equity.


Pension funds
The balance comes from five major public pension funds in Sweden, and a number of corporate retirement schemes, including those operated by Ericsson, Electrolux and Volvo.

Another Scandinavian institution, the Nobel Foundation, is one of its investors, as are a number of private interests.

Its chief executive said Proventus is planning to raise more funds later this year.

The company is well known in Scandinavia but has been working on expanding beyond this base in recent years, mainly to other northern European markets.

Mr Sachs argued yesterday that in the long term, the shift towards non-bank finance that has been gathering momentum in Europe since the financial crisis struck in 2008 is here to stay.