Non-bank lender wants funds to boost credit to agri and SME sectors.
Billy Kane, Executive Chairman of Finance Ireland
Finance Ireland, a non- bank lender headed by former Irish Permanent boss Billy Kane, has hired Goodbody Corporate Finance to raise €25m in fresh equity capital before the end of this year. It raised €25m last December from Pimco Bravo Fund II, managed by Pimco, a large US investment company.
Finance Ireland is also exploring a possible disposal of Everyday Finance, its loan recovery and management business. At the end of last year, the company had just under €500m of loans under management. Everyday Finance claims to be the largest Irish-owned and managed debt purchase and recovery business.
The moves come as Finance Ireland switches its focus from the management of loan books in wind-down to advancing credit to the SME and agri sectors. The company aims to be the largest non-bank lender in Ireland.
Accounts just filed by Finance Ireland show profits fell 10% in 2015 to €3.3m. This was largely as a result of higher overheads as it geared up to kickstart its SME lending and leasing business. Staff costs rose by 20%, or just over €1m, in 2015.
Its motor finance division performed strongly, with €156m of new business, up 33% on 2014. The company acts as an exclusive agent and business partner of Close Brothers Motor Finance, part of the British merchant banking group.
Profits at Finance Ireland’s motor division rose 44% to €3.1m.
Business leasing and lending posted a loss of €596,000 in 2015, compared with profits of €400,000 the previous year. This reflected investment in “development of the lending and leasing franchise”. The reversal was also due to the closure of its highly profitable film finance division, which was discontinued following changes to the operation of the scheme in the 2015 Finance Act.
The company said the leasing and lending division anticipated growth in 2016. This follows the negotiation of a €51m facility from the Strategic Banking Corporation of Ireland, making it the first non-bank to strike a deal with the state’s strategic SME funding company. The group also launched a commercial mortgages division in January, and reported a “strong pipeline” of small- to mid-size commercial properties loans.
In May, the company partnered up with Glanbia, the Ireland Strategic Investment Fund and Rabobank to offer MilkFlex, a €100m loan fund targeted at milk suppliers.
The asset management business was expanded with CarVal Investors, a US fund, and acquired consumer credit loan books from Lombard and Friends First.
The group purchased CarVal’s 95% interest in the Lombard book for €2.5m earlier this year.