Ireland Strategic Investment Fund publishes update on 2019 investment performance

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Ireland Strategic Investment Fund publishes update on 2019 investment performance

The Ireland Strategic Investment Fund (ISIF), managed by the National Treasury Management Agency (NTMA), has published an update on its 2019 investment performance.

 
  • Over €1bn in investment gains generated by ISIF since inception in 2014
  • ISIF’s Irish investment commitments grow to €4.6bn as phased transition from Global Portfolio to Irish Portfolio continues
  • Investment strategy now focusing on five Priority Themes: regional development, housing, indigenous businesses, climate change and sectors adversely affected by Brexit
  • ISIF investments have completed 3,000 new homes with 6,500 new homes under construction and funding advanced for a further 5,500
  • ISIF’s 7th Annual Market Engagement Event is focused on sustainability

The update shows ISIF has now generated in excess of €1 billion in investment gains since inception in December 2014, bringing the total value of the Fund to €8.1 billion.

The Fund generated an investment return of 5.2% in 2019, an increase in value of €457m.

The Fund’s Global Portfolio generated a return of 5.5%, while its Irish Portfolio delivered a return of 5.3%.

The Global Portfolio is a low-risk portfolio designed to fund the Irish Portfolio as investments in Ireland are originated and executed and consists primarily of highly-liquid assets, including cash, cash equivalents, bonds, equities and hedge funds.

The Fund has generated an annualised investment gain of 2.5% per annum since inception in December 2014, a period which has seen prolonged and continuing negative interest rates. The Global Portfolio has delivered an annualised return of 1.7% per annum reflecting its significant exposure to low-yielding investments, while the Irish Portfolio has generated an annualised return of 6.8% per annum.

Commitments to investment in Ireland

ISIF has committed a total of €4.6 billion to Irish investments, in line with its “double bottom line” mandate to invest on a commercial basis to support economic activity and employment in Ireland. This investment has acted as a catalyst to attract co-investment totalling €8.4 billion from private sector and third-party investors in ISIF-backed projects – bringing total investment commitments in Ireland arising from ISIF’s investments to €13.0 billion.

This co-investment multiple of €1.9 private sector co-investment for every €1 committed by ISIF significantly exceeds ISIF’s target at inception of €1 co-investment for every €1 committed by ISIF.

Priority Themes for ISIF investment

Under ISIF’s revised investment strategy announced in early 2019, ISIF, guided by the objectives of Project Ireland 2040, is targeting its future investments in five Priority Themes of key importance to the Irish economy: regional development, housing, indigenous businesses, climate change and sectors adversely affected by Brexit.

Total ISIF 2019 commitments, grouped by Priority Theme, were as follows:

  • Regional development: €59m
  • Housing: €159m
  • Indigenous businesses: €186m, of which €86m are regional-based indigenous businesses
  • Climate change: €34m

In addition, the Fund is continuing to pursue investment opportunities that are suitable for its Connectivity Fund sub-portfolio, which includes investments in airport and port infrastructure and projects that enhance Ireland’s global data and energy connectivity.

The Fund will also maintain flexibility to selectively take advantage of compelling opportunities which are consistent with the Fund’s mandate which do not fit under any Priority Theme.

Details of the 2019 performance were announced at ISIF’s 7th 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:

These figures show that ISIF is delivering on its ‘double bottom line’ mandate to achieve a commercial return and support economic activity and employment in Ireland. Our strategy has been successful in creating significant value for the State and in helping to address some of the key challenges facing the economy.

We have focused today’s 7th Annual ISIF Market Engagement Event on discussing wider perspectives on sustainability. Central to ISIF’s investment strategy is a focus on sustainability and ISIF as a long-term capital provider is a sustainable and long-term source of capital for Irish businesses. In 2019 we shifted our focus to five Priority Themes that are in line with Project Ireland 2040.

ISIF’s 2019 commitments, totalling €442 million, speak to our strategy of bringing strategic relationships and patient capital to Irish projects and businesses principally across the Priority Themes of regional investment, housing and indigenous businesses. As a long-term strategic investor, ISIF also plans to be a strong contributor to Ireland’s transition to a low-carbon economy.

Key elements of ISIF strategy by Priority Theme:

  • Regional development: ISIF is targeting €500m to €750m of commercial investment into regional infrastructure and regional businesses over 7-10 years.
  • Housing: ISIF will address gaps in the capital markets to provide finance that will deliver new homes to the market.  ISIF’s investments to date are expected to support the delivery of 15,000 new homes - with 3,000 already sold and a further 6,500 under construction - and ISIF’s investment strategy is targeting a further 10,000 new homes by 2025. ISIF’s current focus is on unlocking land through equity partnerships and enabling infrastructure.
  • Indigenous businesses: ISIF plans to contribute to the development and scaling 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.

Speakers at today’s event included:

  • Conor O’Kelly, NTMA Chief Executive
  • Eugene O’Callaghan, Director, ISIF
  • David Blood, Generation Investment Management (a sustainable investment management firm he co-founded with former US Vice President Al Gore), was the key note speaker
  • Industry experts and representatives of ISIF-backed companies/joint ventures/projects including:
    • Teresa O’Flynn, Global Head of Sustainable Investing Strategy, Blackrock Alternatives Advisors
    • Maurice Hickey, Executive Chairman, Green Isle Foods
    • John O’Connell, Founder, West Cork Distillers

Article Published: 26/02/2020