Ireland Strategic Investment Fund announces new investment strategy to focus on 5 key priority themes01 Feb 2019
- Future investments to focus on regional development, housing, indigenous businesses, climate change and Brexit
- New strategy follows 2018 review of ISIF mandate
- ISIF’s Irish investment commitments grow to €4.1bn as phased transition from global portfolio to Irish portfolio continues
- ISIF investments have completed 2,000 new homes with funding advanced for a further 10,000
Friday 1st February 2019
The Ireland Strategic Investment Fund (ISIF), managed by the National Treasury Management Agency (NTMA), has today announced a revised investment strategy, guided by the objectives of Project Ireland 2040, to target its future investments in five sectors or priority themes of key importance to the Irish economy:
- Regional development
- Indigenous businesses
- Climate change and
In addition, the Fund will continue to pursue investment opportunities that are suitable for its Connectivity Fund sub-portfolio, which includes existing investments in airport and port infrastructure and projects that enhance Ireland’s global data and IT connectivity.
The Fund will also maintain flexibility to selectively take advantage of compelling opportunities which are consistent with the Fund’s mandate and do not fit under the priority themes.
The new strategy follows a scheduled review of the Fund last year and maintains its “double bottom line” mandate to generate a commercial return and support economic activity and employment in the State.
Details of the new strategy were announced at ISIF’s 6th annual market engagement event, which took place at Convention Centre Dublin today and was attended by over 600 businesspeople, investors, project promoters and advisors.
ISIF Director Eugene O’Callaghan said:
“Our new focused strategy takes account of the significant progress made in the Irish economy and investment climate since ISIF opened for business, and the fact the opportunities and challenges facing the Irish economy in 2019 are very different to those of 2014.
Our plans will ensure that ISIF is well placed to invest across the priority themes and to deliver on our ‘double bottom line’ mandate. We will seek to use the Fund’s characteristics of scale, flexibility and long-term timeframe to deliver investment returns while also having impact that ‘makes a difference’ in the Irish economy.
It will be important for ISIF to contribute to the wider development of the Irish economy and also to be the investor of choice for ambitious companies and projects that can use ISIF and co-investor capital to drive their long-term sustainability and success.”
Minister for Finance and Public Expenditure and Reform, Paschal Donohoe TD, said:
“I welcome the launch today of the ISIF Investment Strategy 2.0, which is the culmination of a review of ISIF’s strategy commenced by my Department in 2017. It has resulted in ISIF transitioning from a broad investment strategy to one with a focus on priorities that will support the Government’s Project Ireland 2040.
Under the new strategy, ISIF will now target the delivery of a €3 billion 5-year investment programme which will focus on the key areas of regional development, housing supply, indigenous industry, and projects to address climate change and sectors with the potential adversely affected by Brexit. I wish the ISIF team every continued success in striving to support growth and employment in Ireland over the coming five years.”
Key elements of new strategy:
- Regional development: ISIF is targeting €500m to €750m of commercial investment into regional businesses and projects over the next 5 years.
- Housing: ISIF will address gaps in the capital markets to provide finance that will deliver up to 25,000 homes by 2025.
- Indigenous businesses: ISIF plans to contribute to the development of the next wave of larger-scale indigenous businesses that will compete internationally.
- Climate action: ISIF will build on existing investments in renewable energy and carbon emission reduction to support Ireland’s transition to a low-carbon economy.
- Brexit: ISIF will seek out commercial investments in businesses that may be adversely affected by Brexit to enable long-term product and markets diversification.
Update on ISIF investment performance in 2018 (figures unaudited)
To coincide with today’s event, ISIF published an update on its investment performance in 2018 alongside its latest half-yearly Economic Impact Report.
Key points of the update and Economic Impact Report include:
- As at December 2018, ISIF has invested €4.1 billion in Irish businesses and projects.
- ISIF has generated an annualised investment gain of 1.8% per annum since inception in December 2014, which was a period of prolonged and continuing negative interest rates, with investment gains adding €576 million to the total value of the Fund.
- During 2018, ISIF’s investment performance reflected global declines across almost all major asset classes that have contributed to the general trend of negative returns among investment funds and asset managers: the Fund generated an investment return of minus 1.1% during 2018, with a 3.1% fall in ISIF’s global portfolio partially offset by a 4.7% gain in its Irish portfolio.
- ISIF is exceeding its original target of attracting €1 million in private sector investment alongside every €1 million it invests – the current private sector co-investment rate is €1.8 million alongside every €1 million invested by ISIF.
- ISIF and co-investors have now committed €11.6 billion to investments in Ireland (€4.1 billion ISIF/€7.5 billion co-investors).
- ISIF has been responding to the housing crisis since 2015 and through its investments has completed over 2,000 residential units at the end of 2018 with funding advanced in respect of a further 10,000 units.
- 30,000 people work in businesses and projects supported by ISIF investment, with over 50% of these outside Dublin.
Speakers at today’s event included:
- Paschal Donohoe TD, Minister for Finance and Public Expenditure and Reform
- Conor O’Kelly, NTMA Chief Executive
- Representatives from both businesses and projects in which ISIF has invested and regional bodies, together with independent sector experts
- Kirsten Dunlop, CEO of Climate KIC
- Adrian Percy, former Global Head of Research and Development for the crop science division at Bayer, a major international nutrition and life sciences group