THE NATIONAL PENSIONS Reserve Fund (NPRF) has announced an €850 million investment in three new funds for small and medium enterprises (SMEs).

The funds were referenced in Budget 2013  and the NPRF said it will play a significant role in their development. The three funds combined will involve a commitment by the NPRF of up to €500 million as a cornerstone investor but should generate €850 depending on the amount of third-party investment raised.

The three funds are as follows:

• The SME Equity Fund: Up to €350 million will be available, €125 of which will be invested by NPRF. This fund will invest in healthy businesses seeking to grow, including those with over-leveraged balance sheets.
• The SME Turnaround Fund: With a total effective fund of €100 million, €50 million of which will come from the NPRF will be invested in under-performing businesses which are at or close to the point of insolvency but have potential for financial and operational restructuring.
• The SME Credit Fund: This fund has the largest investment of €450 million with €175 to €350 million coming from the NPRF. This fund will be used to lend to larger SMEs and mid-sized corporates. It may also acquire and refinance loans close to maturity where existing lenders are not willing to provide new lines of credit.

Today the NPRF said it is also currently reviewing additional SME fund opportunities that would complement those announced today, with the objective that the eventual suite of funds would have the capacity to invest across the full spectrum of SME financing needs.

The Irish Small and Medium Enterprises Association (ISME) welcomed the announcement and said that the financing of SMEs is “an essential component to our economic recovery”.

Read: SMEs remain broadly dissatisfied with Government performance – survey>

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