Residential development lender Activate Capital has closed the first phase of its secondary €500 million fundraising round, and said it plans to expand its capital to €1 billion in 2018.
Activate's original investing partners, the Ireland Strategic Investment Fund and KKR, have committed an additional €270 million to their existing investment of €500 million.
Activate said it planned to expand its available capital for residential development to €1 billion later this year, and would create an opportunity for third party institutional investors to invest.
This additional €230 million is most likely going to come from institutional investors including both domestic and international pension funds, the comany's chief executive, Robert Gallagher, told The Irish Times.
“Home builders are materially stepping up production in Ireland,” he added. “Our pipeline is very strong and we have good visibility into 2019 and beyond. The additional commitment of €270 million by ISIF and KKR underpins our ability to continue to lend to good projects across the country.”
Activate was established in 2016, and has lent more than €400 million in support of developments comprising 4,200 homes. It provides homebuilders with finance to acquire sites and begin production. The company typically lends up to five years and its interest rate varies depending on risk.
Generally the company will lend to projects with planning permission, however, it also lends to developers seeking to fund a project in zoned land.
The residentially focused lender notes there’s space for the company to co-exist with banks, considering their prescribed appetite for development financing.
Eugene O’Callaghan, ISIF’s director, said its funds are focused on encouraging “private capital to invest alongside it in sectors and areas of the Irish economy which continue to experience market failues”.
“Residential housing is an important sector for ISIF in this context. We have committed more than €600 million to platforms that are targeting delivery of more than 10,000 units in the main urban centres and Activitate is a central part of this strategy.
“The additional funding being announced today will enable Activate to meet the demand that clearly exists from the development sector.”
