ISIF and KKR Credit establish Activate Capital lending platform
Move will provide urgently needed long-term capital to address housing
supply shortage, with capacity to fund over 11,000 new homes
ISIF's biggest single investment to date
Construction will create an average of 1,900 new full-time jobs per
Meets ISIF's "double bottom line" criteria of commercial return and
The Ireland Strategic Investment Fund (ISIF), managed by the National
Treasury Management Agency (NTMA), together with KKR Credit, have today
announced the launch of a new €500 million joint venture, which
transforms the funding options available to the Irish house building
sector and will be capable of financing the construction of over 11,000
new homes in Ireland.
Activate Capital will focus exclusively on lending to Irish residential
development projects. The lending platform will facilitate home-builders
in engaging on medium/large scale housing schemes, delivering a material
increase in housing supply.
Activate Capital will lend on a commercial basis to projects, providing
home-building companies with cost effective loans for up to 90 per cent
of the total financing requirement.
As a large and labour intensive sector, recovery in the construction
industry will be critical to the realisation of further employment gains
in Ireland. The establishment of Activate Capital is intended as a
significant step towards unlocking credit for Irish house builders.
Projects funded by the new joint venture are expected to create an
average of 1,900 full-time jobs per annum in construction and ancillary
The ISIF will contribute €325 million towards the joint venture, making
it the biggest single investment yet undertaken by the ISIF. KKR will
provide the remaining €175 million.
Activate Capital will be managed by an independent executive team led by
Robert Gallagher as Chief Executive Officer and chaired by Dan O'Connor.
Mr Gallagher is currently a Director with KKR with responsibility for
the firm's investing activities in Ireland. Mr O'Connor is former
President and Chief Executive Officer of GE Consumer Finance - Europe
and a former Executive Chairman of AIB Group plc.
Capnua Corporate Finance and Dan O'Connor developed the Activate Capital
proposition and advised on the establishment of the platform.
Minister Michael Noonan said:
"Today's launch of the joint venture between the Ireland Strategic
Investment Fund (ISIF) and KKR Credit is good news for jobs, growth,
potential house purchasers, and the construction sector. Activate
Capital will be an important source of funding for increasing the supply
of medium to large housing developments. It will invest in the
development and construction of housing, with €500 million of financing,
which will assist in normalising the sector and addressing the housing
"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."
Minister Alan Kelly said:
"Demand for housing is significant and this fund will stimulate
activity in the sector. Construction is still below what we might
consider normal levels and with very significant housing pressures, this
will give the sector an important boost and shows that it's a safe place
"Many builders and developers are reporting difficulties accessing
finance for building projects so this investment is hugely significant."
ISIF Head of Private Equity Fergal McAleavey said:
"There is a significant mismatch between the demand for quality new
homes in Ireland and the supply that is currently available.
"Our joint venture will help to address this by providing funding on
a commercial basis to development projects that are capable of
delivering over 11,000 new homes.
"This will meet the ISIF's ‘double bottom line' criteria of achieving
commercial returns while delivering a significant economic impact - in
this case by providing crucial infrastructure that Ireland needs
"With this joint venture, we are also establishing a major new
non-bank lending platform which can continue to provide financing to the
sector for many years to come. This will bring additional benefits to
the Irish economy in the form of increased lending capacity and
increased competition in the market for residential development lending."
Johannes P. Huth, Head of KKR Europe, Africa and Middle East, said:
"This is about supporting the strong recovery underway in the Irish
economy, by providing for the housing needs of Ireland's growing
population and expanding workforce.
"The combination of our firm's significant presence in Ireland and
our ability to provide long-term capital, allows us to partner with the
Ireland Strategic Investment Fund in supporting this innovative
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Notes to editors
About the ISIF
The €7.6 billion ISIF was established in December 2014 with a
statutory mandate to invest on a commercial basis in a manner designed
to support economic activity and employment in the State. The fund has
made investment commitments to date of €1.5 billion (including
National Pensions Reserve Fund investments prior to December 2014 when
the ISIF was established and NPRF assets transferred to it) and plans
to deploy the remainder over the coming years as suitable investment
opportunities are identified.
KKR is a leading global investment firm that manages investments
across multiple asset classes including private equity, energy,
infrastructure, real estate, credit and hedge funds. KKR aims to
generate attractive investment returns by following a patient and
disciplined investment approach, employing world-class people, and
driving growth and value creation at the asset level. KKR invests its
own capital alongside its partners' capital and brings opportunities
to others through its capital markets business. References to KKR's
investments may include the activities of its sponsored funds. For
additional information about KKR & Co. L.P. (NYSE:KKR), please visit
KKR's website at www.kkr.com.
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