The Ireland Strategic Investment Fund (ISIF) has made its largest financial commitment of the year to a new fund that finances hard-to-reach SMEs.
ISIF has put €60m into a new European lending fund being raised by Muzinich, a global credit investor that has already financed such well-known companies as Citybin and Fastway Couriers, among several other Irish firms.
The allocation is the fifth announced by the State sovereign wealth fund in 2022, after commitments to Claret Capital, Act Ventures, the Hotel Investment Fund and the Solas Sustainable Energy Fund.
Muzinich will be offering bespoke debt capital deals to companies with earnings of between €3m and €20m = that may find it difficult to access bank finance – in Ireland, the UK and across Europe.
The aim is to find some of those overlooked businesses in the lower end of the mid-market that have growth potential.
“Our partnership with Muzinich has been very effective over the past five years in extending our reach among growing Irish businesses and offering them tailored solutions to meet their unique requirements,” said ISIF director Nick Ashmore.
The investment is the second major commitment ISIF has made to Muzinich, which has deployed €160m in private debt funding in Ireland since setting up a local presence in 2017.
That year ISIF made a €45m cornerstone allocation to Muzinich’s first Pan European Private Debt Fund, providing an anchor for large institutional investors also seeking to invest in Ireland.
That fund is now closed to further investment and Muzinich is marketing its second fund, which now has €770m in firepower following ISIF’s €60m investment.
Irish investments make up 16pc of the total in the two funds, which is spread around major European markets including the UK, France, Italy, the Netherlands and Germany.
The Muzinich fund is the second debt funding investment ISIF has made this year, after putting €15m into a Claret Capital vehicle.
Muzinich has completed over 90 investments in Europe since launching its private debt platform in 2014, with over 40 realisations.
The firm targets growing businesses with solid operating models across all sectors and funds growth, mergers and acquisitions, management buyouts and shareholder restructurings.
In addition to Fastway and Citybin, Muzinich is also behind Sonas Bathrooms and tech company DigitalWell.
“There is an increasing need for flexible, long-term and patient capital to support the scaling of Irish businesses, which the fund will seek to provide,” said Howard Mahon, Muzinich’s Dublin-based managing director for European private debt.
Muzinich has been marketing its private debt strategy this year as a hedge against interest rate rises and as a refuge from volatility on public markets, which have suffered significant losses in 2022.
The company declined to provide annual or total return figures for its private debt funds.
An ISIF spokesperson said that the aim of the commitment was to “catalyse foreign investment” and that every €1 deployed by the fund attracts roughly €1.60 in parallel investments.