A resurgent banking sector has seen the Ireland Strategic Investment Fund (ISIF) reassess its role as debtor to Irish companies, with rising competition from lenders leading the sovereign wealth fund to consider other roles.

Donal Murphy, the €7.1bn fund’s head of infrastructure and credit finance, told IPE the funding gap that existed after the financial crisis was often no longer there, replaced by a “wall of liquidity coming from bank debt back into Ireland”.

“There are plenty of scenarios where there is a very competitive bank market with a large number of banks seeking roles on individual transactions and individual deals,” he said.

Murphy explained that situations where there were sometimes up to a dozen banks competing for term sheets would not see ISIF join a queue to bid.

“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.

According to Murphy, currently, there is more likely to be an equity gap facing transactions, allowing ISIF to use its flexible mandate and act as an equity house.

“Having that flexibility can allow us to look up and down that structure, and it may be we play a different role on that transaction than maybe we would have initially envisaged,” he said.

“But it’s still a very useful role and, even more importantly, an enabling role in transactions taking place that might have otherwise struggled.”

He also stressed that it was important the ISIF not end up acting as financier to projects no other lender had shown an interest in, as it was still important for the fund to keep the required commercial return in mind.

Murphy previously said the fund would consider investing in social housing projects, although these would likely be deemed of low economic impact.

Speaking at a conference in November, he said the fund would grade projects for offering low or high economic impact as part of its mandate to stimulate growth in Ireland.

For more from Donal Murphy on the ISIF’s approach to funding and how it assesses the economic impact of projects, see the Pensions In Ireland section in the current issue of IPE