Ireland's sovereign fund targets peer-to-peer lending
Ireland’s sovereign development fund may soon finance company loans advertised through peer-to-peer lending portals in an attempt to expand the range of credit available to small and medium-sized enterprises (SMEs).
The €7.2bn Ireland Strategic Investment Fund (ISIF) said it would consider providing capital to a vehicle, the Platform Investment Fund (PIF), that would invest in loans originated by next generation lending platforms (NGPs).
It said it would regard any platform using the internet “and other new technologies” as the principal means of originating new loans as an NGP.
“Funding is expected to be provided for both working capital (including single and batch invoice and supply chain finance) and loans outstanding for more extended periods,” the request for proposal published by the National Treasury Management Agency (NTMA) said.
The tender comes only a few months after Donal Murphy, the ISIF’s head of infrastructure and credit finance, told IPE a resurgent banking sector was seeing it rethink its approach to SME lending.
“We’d either look at that transaction for a potential junior debt or equity role, if there’s an absence of that, or we’ll move on and look at a different transaction or sector,” he said at the time.
The NTMA said it was looking to establish the level of interest from managers who could oversee the proposed PIF and, although not explicitly stated, the loans would likely be aimed at companies based in Ireland due to the ISIF’s mandate to see a return on its investments and stimulate the domestic economy.
“The PIF (once established) will ultimately select the counterparty that will perform this function, and the PIF will be the counterparty to any applicable agreements and contractual arrangements,” it said.
The NTMA added that any interested party should have the capacity to manage a large number of individual loans, expected to be under €500,000 each, and would be expected to conduct all due diligence ahead of investment, as well as loan management and recovery where necessary.
The tender comes only a few days after ISIF made its first official investment, acquiring a 15% stake in life sciences company Malin Corporation.
Malin, which listed on the Irish Stock Exchange late last month, committed to invest €150m in Irish life sciences and create at least 200 jobs over the next five years.
Eugene O’Callaghan, director at ISIF, said the €50m investment met both of its “double bottom line” criteria.
“The commitments we have agreed with Malin demonstrate our investments are designed to stimulate high-quality economic activity in Ireland, support employment in Ireland and deliver commercial investment returns,” he said.
While the National Pensions Reserve Fund has gradually been increasing its exposure to Ireland in anticipation of the launch of ISIF, the Malin investment is the first since the sovereign development fund was formally established in late 2014.