Fintech CEO Padraig Rushe has plans to launch a new €150 million ($176 million) senior debt fund within the next three months, which will specialize in financing residential property developments, to fund the construction of more than 2,500 new family homes in high-demand areas across Ireland over the next five years. The fund, which will target an annual return of 7 percent to 7.5 percent, has already secured backing from Abbey International Finance, which will invest up to €20 million ($24 million) in the fund.
It is expected that the fund will be structured as a sub-fund of The Davy Platform ICAV umbrella fund structure and that the Davy group will provide regulatory and investment management services to the fund. Initiative Ireland shall provide investment advisory services to the fund in addition to Loan Management Services. Initiative Ireland, which specializes in syndicated property finance, will enable the fund to lend alongside their existing private and corporate clients, via their syndicated finance platform www.InitiativeIreland.ie .
It is anticipated that the fund will facilitate increased levels of lending via Initiative Ireland’s fintech platform, which has an existing loan pipeline more than €150 million ($176 million), comprised of more than 30 housing developments in high-demand areas across Ireland.
Through syndication, the planned senior debt fund will benefit from additional diversification and optimized returns while also facilitating additional loans for Initiative Ireland’s existing private lenders to co-fund. All loans will be provided in line with the fund and platform’s strict lending criteria, which is highly selective.
Intended to be a closed-ended five-year fund, it is expected to provide finance for terms of up to two years to developers via special-purpose vehicles, re-deploying funds over the lifetime of the fund to creditworthy projects.
“We will be marketing the opportunity both in Ireland and across Europe, to pension fund managers, large institutional investors and family offices alike. It will also open to qualified investors in Ireland subject to a regulatory minimum investment of €100,000 ($180,000),” said Rushe.
Rushe added, “One of Initiative Ireland’s core objectives is to promote financial inclusion. As such, investors who cannot commit the required amount for the fund will still be able to open Private Lending Accounts or Corporate Lending Accounts with InitiativeIreland.ie to access the underlying secured asset class, directly lending alongside the fund at smaller amounts.”
Initiative Ireland currently specializes in financing projects of up to €10 million ($12 million), through their peer to peer lending platform, providing competitive finance to experienced developers with what it deems to be lower risk, smaller projects. As such, the fund is expected to secure high levels of diversification across the property finance market. All loans shall be asset-backed, secured with a first legal charge against the underlying properties.
Rushe explains how Initiative Ireland’s model is designed to address the housing crisis in particular, “When you finance the construction of 500 homes via a single development, you’ll likely see those 500 homes drip-fed into the local market over a longer period. In contrast if Initiative Ireland provides finance for 500 homes it is more likely to be across a minimum of 20 developments, with each developer delivering 25 homes as quickly as they can, spread across a wider geography. It’s more work for us, but it can deliver better outcomes for the market on several fronts. It offers more competition for the market and reduces development concentration, which is essential to stabilizing the Irish housing market.”
Initiative Ireland, a University College Dublin (UCD) spin-in company headquartered at NovaUCD, the Centre for New Ventures and Entrepreneurs, was co-founded by CEO Padraig W. Rushe, CCO Padraig M. Rushe and COO Rory McEntee and is supported by Enterprise Ireland as a High-Potential Start Up.
