NPRF helps BlueBay towards €450m goal

Irish pension fund National Pension Reserve Fund (NPRF), chaired by Paul Carty (pictured), has made a cornerstone commitment of up €350m to BlueBay SME Credit Fund.

The European debt fund arm of Royal Bank of Canada, BlueBay Asset Management, is in the process of finalising commitments for a €450 million credit fund, allowing the firm to start issuing loans to Irish SMEs by the end of June, the firm confirmed with Private Debt Investor. 

The fund’s strategy is focused on directly issuing new loans to SMEs, refinancing loans for existing clients, and buying loans from banks that are exiting the market. The fund will make up to 20 investments, with loan sizes ranging from €5 million to €50 million with an estimated average size of €15 million.

Returns to investors in the fund will vary according to their position in the fund’s capital structure, the firm said in a statement.  On the whole, the fund will hold interest rates on loans at an excess of 5.5 percent, over a seven year maturity.  

BlueBay has already secured a commitment of a minimum of €175 million and maximum of €350 million from Ireland's National Pension Reserve Fund. “It all depends on the amount of third-party investment raised,” a spokesman for NPRF confirmed in a statement.  

A surge in demand from other Irish pension funds and US investors means that NPRF’s contribution to the fund will be on the lower end of that spectrum.  

The NPRF, alongside other major Irish pension funds, is allocating substantial capital into SME streams in a bid to “focus on investment opportunities in the Irish economy while at the same time earning commercial returns,” Paul Carty, chairman of the NPRF, said in a statement.

The pension fund announced in January it would make up to €850 million available for investment in Irish SME sector. This includes a €125 million commitment in Carlyne’s SME fund, focusing on investing in healthy businesses seeking to grow, including those with overleveraged balance sheets. It also includes a €100 million commitment to Better Capital’s Turnaround fund, investing in underperforming businesses which are at or close to the point of insolvency but have the potential for financial and operational restructuring.