Donohoe: Aer Lingus €150m loan shows need for recovery fund

Over 90% of the ISIF investments in 2020 were given to businesses impacted by the Covid-19 pandemic
Donohoe: Aer Lingus €150m loan shows need for recovery fund

Paschal Donohoe, Minister for Finance. Picture: Moya Nolan

Finance Minister Paschal Donohoe has said the €150m three-year loan agreed with Aer Lingus is an “excellent example of the need for the pandemic stabilisation and recovery facility”, which is being managed by the Ireland Strategic Investment Fund (ISIF).

The Minister's comments come after the Taoiseach, and Ministers in the Cabinet’s economic sub-committee, were briefed last week that the cost of the third lockdown in January exceeded expectations.

Over 90% of the ISIF investments in 2020 were given to businesses impacted by the Covid-19 pandemic.

ISIF, which is managed by the NTMA, was mandated by the Government last May to invest up to €2bn in medium to large Irish firms who were struggling as a result of the Covid-19 crisis and assist in their recovery.

To date, the vast majority of the over €430m invested in Irish companies last year was paid out via the Pandemic Stabilisation and Recovery Fund (PSRF), which has a further €600m in potential pipeline transactions.

Aer Lingus, Daa, Finance Ireland and tourist accommodation provider Staycity have all benefited from the fund so far.

IAG-owned Aer Lingus has secured the largest investment to date at €150m, while Daa, which operates Dublin and Cork airports, has been granted some €40 in so-called “stabilisation investments” from the fund.

IAG-owned Aer Lingus has secured the largest investment to date at €150m. Picture: PA Wire
IAG-owned Aer Lingus has secured the largest investment to date at €150m. Picture: PA Wire

Speaking today, Minister for Finance Paschal Donohoe said the ISIF has continued to support economic activity and employment in Ireland despite the challenges of a global pandemic, and the PSRF has been an “important component in the Government’s support measures for Irish businesses.” 

"[Aer Lingus] Is a significant contributor to the Irish economy, both as an employer and as a vital link for Irish businesses exporting to global businesses for foreign direct investment into Ireland and of course for our tourism and hospitality industries."

“It matches his ISIF’s capacity with a strong business, which is able to use ISIF capital as a platform for rebuilding post-Covid, supporting jobs in Ireland and contributing to the resumption of normalised economic activity as we begin the path to recovering our economic and our public health.” 

The Minister said ISIF’s successful investment strategy will help to drive Ireland’s economic recovery by enabling strategically important businesses to “not only survive the crisis but also to recover and regain longer-term momentum.” 

ISIF generated an investment return of 6.2% in 2020, an increase in value of over €500m.

This has been driven primarily by ISIF’s exposure to global funds that committed to investments in Ireland according to NTMA chief executive Conor O’Kelly.

In total ISIF has now generated in excess of €1.5bn in investment gains since inception, bringing the total value of the Fund to €8.6bn.

The Fund has generated an annualised investment gain of 3.1% per annum since January 2015.

NTMA Chief Executive Conor O’Kelly said the ISIF successfully demonstrated the importance of its “flexibility” and its ability to deploy capital during 2020, supporting Irish businesses and the Irish economy at a time of “unprecedented challenge.” 

“We are pleased with ISIF’s strong investment return of over 6.2% in 2020, producing more than €500m in investment gains which can be used to further invest in Ireland’s recovery and long-term future”.

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