Pension reserve fund to develop supports for small firms

The National Pensions Reserve Fund is developing a range of support funds in partnership with third-party investors — ranging in size from €100m to €400m — for the SME sector.

Jobs Minister Richard Bruton said yesterday these will provide equity, credit and recovery investment for the country’s small business community. However, the minister was slow to add much information on the plan, apart from saying that full details would be published during the first quarter of the new year.

Asked yesterday about reports that BlueBay Asset Management — a London-based fixed-income investment firm — is set to be one of the players to join with the NPRF to offer loans to Irish SMEs, Mr Bruton did not deny nor confirm.

The Bloomberg news agency had reported that BlueBay was planning on creating a fund — in conjunction with the NPRF — aiming to raise as much as €450m.

The Government did say, however, that the new funds will invest or offer credit to SMEs across all sectors of the economy, with the property/ real estate sector the only exception.

It added: “Within the suite currently under development, there are equity funds targeting investment of €5m upwards and credit funds focused on lending to the full range of SME companies that may be looking to borrow from €50,000 to €50m.”

“Third-party investors into these funds are being sought on a phased basis, with the NPRF acting as an initial cornerstone investor. Having a cornerstone investor in place and visibility from initial operations as to the types of investment transactions each fund will enter into, are the key elements required to market these investment opportunities to third-party investors, both domestic and international,” the Department of Finance added.

The department also stressed that the funds, once operational, will have capital ready for “immediate deployment”.

“It is intended that a number of the funds will be operational in the first and second quarter of 2013,” it added.

The fund, Bloomberg reported, is looking to start senior secured lending by the end of the first quarter and will seek to deliver an annual return of 15% for equity investors, said one of the people. Officials at BlueBay declined to comment. Ray Gordon, a pension fund spokesman, wasn’t immediately able to comment.

BlueBay is owned by Toronto-based Royal Bank of Canada, the country’s biggest lender, which paid about £963m (€1,185m) for the firm in 2010.