Cereal link to home loan player

FEW could have predicted that the latest entrant to the mortgage market could have grown up from the success of cereal crops in Wexford.

But if Bank of Ireland’s sale of €250m worth of loans originally given out by the ICS Building Society is finalised that is exactly what will happen.

Last week it was announced that the buyer of the ICS assets will be Dilosk Ltd. The deal was ordered by the European Commission when it demanded Bank of Ireland do something to improve competition in the mortgage market.

Dilosk will take on a performing loan book that has been stripped of the potentially loss making tracker mortgages. Importantly, the company will also benefit from the network of brokers established by ICS. It will not buy deposits, which will be moved back onto Bank of Ireland’s books.

Information about the newest player in the mortgage market is limited, although it has indicated it will continue to operate the ICS brand.

Dilosk has also set its sights on expanding. So once it has been given the OK by the Central Bank the relative anonymity is likely to change.

The company’s website says that on top of acquiring loan books such as ICS it will “offer new residential loans” and lend to allow buy-to-let investors restructure as “an alternative source of financing to the traditional mortgage market”.

Its chief executive, Fergal McGrath, said the ICS deal, which has to be approved by the Financial Regulator, has allowed the Merrion Square-based company to set out its stall.

Dilosk has yet to be approved for a retail credit licence so the details of the company’s overall model is unclear. But the source of its initial investment is.

The money that has gone into Dilosk is, mostly, local. The bulk of the shareholding in the Dilosk Ltd is divided among five parties.

Two are Dublin-based investment specialists, two work from Wexford and are fresh from recent windfall successes and there is one French lawyer.

Together they own all Dilosk shares.

Of the three largest shareholders two are linked to the agricultural businesses based in Wexford.

Kevin Cooney, a non-executive director, is also a director at a family-controlled unlimited company, the Acapulco Trust Ltd, which owns the Dilosk shares.

He owns 50% of Cooney Furlong Ltd. The grain company dries and produces products from local farms and had a turnover of €53m in 2012.

Last year it expanded into three former co-op shops in Wexford.

Its expansion, and recent success, has been boosted by a major deal in 2012 when the agricultural-focused investment fund, Fondomonte, was sold to a Saudi Arabian firm for $83m (€60m).

Fondomonte was registered as a Luxembourg holding outfit which controlled more than 12,000 hectares of corn and soy crops in Argentina.

But its owners were a collection of Irish-based individuals and farming groups. Its largest shareholder was Cooney Furlong and its chairman was Oran McGrath.

Oran McGrath is the second largest shareholder in the new mortgage operator, Dilosk. He is also from Wexford and has been in business with Kevin Cooney in a number of companies, including Gorey Grain where he is a director.

The pair were also involved in the success of Medentech which employees 80 people in Wexford town making water purification tablets.

Mr McGrath bought and was the managing director of the company and, according to Dilosk’s website, he oversaw its sale in 2013.

The third major principal shareholder is its CEO Fergal McGrath, who was previously the head of portfolio management at Dexia.

The final Irish investor is Ray McMahon who is head of the investment group Canaccord and previously worked for Merrill Lynch.

The company’s senior administrator is Alana Johnston, who was the personal assistant for junior minister Mary White of the Green Party during the last government.


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