€450m lending fund by June from Blue Bay

Global investment firm Blue Bay Asset Management agreed late last year to team up with the National Pensions Reserve Fund (NPRF) to help create a €450m small and medium enterprises (SME) credit fund.

The final make-up of investment into that fund will be finalised over the next weeks, clearing the way for lending to begin this summer, Blue Bay’s Iain Burnett told the IrishIndependent.

Blue Bay plans to operate at the upper end of the SME segment, advancing term loans of between €5m and €45m to Irish companies.

The fund will have a seven- year life span, which means it is likely to lend out the €450m pot over five years and return the cash and profits to investors at the end of the seven-year cycle.

The fund will only advance term loans, so borrowers will still need to access traditional banks for overdraft facilities, foreign exchange and other financing lines.

Interest rates to business are likely to be in excess of 5.5pc, in line with the bank market.

Having access to finance and lenders that are able to make decisions quickly, rather than the cost of finance are the two main concerns of business owners in the current market, Blue Bay’s Pat Walsh said.

The company will manage the fund and deal with clients, with financing sourced from both the NPRF – which has committed to a minimum of €175m and maximum of €350m of the total fund – alongside finance sourced by Blue Bay.

Strong private sector demand, mainly from Irish pension funds and US investors, means the NPRF contribution will be at the lower end of its initial commitment, Blue Bay said.

A former IBRC executive, Mr Walsh has been brought in to head up the Dublin office and is already in discussions with potential borrowers, the investment firm added.

The venture is one of three partnerships that the NPRF is making with financiers in an effort to get capital into the SME sector.

The other tie-ups are with Better Capital and private equity firm Carlyle.

In Blue Bay’s case, the fund can make new business loans, buy loans from banks that are exiting the market or refinance loans for clients,

Even where it buys a loan the plan is to step in as lender for the affected business, not to take a stake or indeed control in the operators. Source: Irish Independent