Finance Ireland is getting into the Irish residential mortgage market, buying Pepper Money's €200 million loan portfolio.
The value of the deal was not disclosed. The lender, which is led by former Permanent TSB chief Billy Kane, plans to expand its mortgage offering early next year to compete with the main retail banks.
The deal marks Pepper’s exit from the residential mortgage market, which it entered in January 2016. Pepper’s €200 million mortgage book contains around 900 loans, and is a mixture of owner-occupier and buy-to-let mortgages. The average loan size is arounf €220,000.
Customers will transfer to Finance Ireland under the existing terms and conditions of their loans. It is understood between 10 and 15 staff from Pepper Money will move to Finance Ireland when the transaction is completed.
The move ends speculation that an announcement was imminent from Finance Ireland, which is backed by the Ireland Strategic Investment Fund (Isif). Established by Mr Kane in 2002, it employs 115 people and had more than €430 million in lending last year. The company operates in agri finance, provides funding for SMEs, and offers car and commercial real estate loans.
Mr Kane said that the transaction would speed up the company’s entry into the residential mortgage market, and confirmed plans to broaden its product range in early 2019.
Pepper said the decision to sell the division was part of a European strategic plan to grow its loan servicing business, separating its separate its lending and servicing businesses into different units in Europe. The Australian company was bought by US-based private equity giant KKR last year.
“The agreement with Finance Ireland is a very positive reflection on the success of our residential mortgage offering since its launch in 2016, the strength of our residential mortgage platform and the quality of our residential team,” said Cormac Ryan, CEO of Pepper in Ireland
Pepper will continue to operate and expand its Pepper Money Commercial lending business. Under the deal, the company will also continue to service the existing loans on behalf of Finance Ireland, and will also take on loans originated in the future.
