The Ireland Strategic Investment Fund, Dublin, Ireland, formed a €500 million ($549 million) joint venture with KKR Credit, which will lend to Irish residential development projects.
The joint venture, Activate Capital, is a lending platform that could finance the construction of more than 11,000 new homes in Ireland. The platform will lend on a commercial basis to projects, providing companies with loans for up to 90% of the total financing needed.
The €7.6 billion ISIF is contributing €325 million toward the joint venture — the biggest single investment yet by the ISIF, it said in a statement on its website. KKR will provide the remaining €175 million. Robert Gallagher, director at KKR responsible for the firm's investing activities in Ireland, becomes CEO of Activate Capital.
“This will meet the ISIF's 'doubt bottom line' criteria of achieving commercial returns while delivering a significant economic impact — in this case by providing crucial infrastructure that Ireland needs urgently,” said Fergal McAleavey, head of private equity at ISIF, in the statement.
In the statement, Minister for Finance Michael Noonan said: “The announcement is a win-win for the state from all perspectives: economically, we are increasing activity in the housing sector, which is vital for our economic competitiveness and long-term growth prospects; financially, we are generating a commercial financial return for the Ireland Strategic Investment Fund, which can be continually recycled into new and additional projects; and socially, we are supporting employment in a sector that was worst hit during the crash and it is noteworthy that employment in the sector will be at all levels from early school leavers through to third level graduates.”
The ISIF was established last December as a sovereign wealth fund with a statutory mandate to invest on a commercial basis that supports economic activity and employment in the country. The assets of the National Pensions Reserve Fund became assets of ISIF upon its establishment.