Pension investment specialist Independent Trustee Company (ITC) said Irish investors are shunning poor-performing international equity markets in favour of local businesses. That shift will come as a welcome boost for Irish SMEs seeking expansion funds over the next 12 months.
ITC managing director Aidan McLoughlin said: “In terms of new business activity by SSASs (small self administered pension schemes), we have seen investment in private business move from being less than 5% to more than 20% of all new equity investments currently.
“We expect this to grow exponentially over the next 12 months as the SME directors and many self-employed redirect significant elements of their pension fund towards other Irish private businesses. Self-administered schemes are a key solution as private pension investment in Irish business has soared in popularity.
“Investors like the idea of investing in real businesses which can deliver real returns. At the same time viable and successful Irish businesses get access to the capital needed to survive and grow.”
ITC cites three reasons for this stay-local shift. Local businesses are in need of working capital and offer attractive deals. The banks are reluctant to lend. And pension investors are being advised that an investment in Irish business represents a sound business investment opportunity.
Mr McLoughlin said: “From our own experience the range of businesses invested in is vast — from hair salons to hospitals, from electricity producers to light bulb providers, from online networking to offline bar stool providers.
“The investment amounts vary from a typical investment of €50-100,000 for prearranged schemes to €1m plus for larger brought-to-market schemes.” He said the mechanism is simple: Individual investors acquire a stake in a collective investment structure and that structure, in turn, makes the investment in the target business or asset.