Ireland's sovereign wealth fund's domestic investments in 2020 were almost exclusively in businesses impacted by the COVID-19 pandemic, including a €150 million loan to Aer Lingus.
The Ireland Strategic Investment Fund (ISIF) was established in 2014 to invest in supporting economic activity and employment in Ireland. It was mandated last May to invest up to €2 billion directly in larger firms hit by the pandemic via equity, debt and hybrid instruments.
It said this week that 90% of the €430 million invested in Ireland in 2020 was for this purpose, mostly so-called "stabilisation investments", including the three-year Aer Lingus loan and €40 million committed to the Dublin Airport Authority (DAA).
"It is a commercial investment, it's not state aid," Conor O'Kelly, the chief executive of the National Treasury Management Agency, which oversees ISIF, told a news conference in relation to the Aer Lingus loan. "Probably the reason that Aer Lingus would want liquidity from us is it's possible that the banking system is going to find itself already over-exposed to the sector."
Aer Lingus said in a statement that the debt facility represents an important contribution to its future funding requirements as it navigates through the unprecedented crisis.
ISIF is currently working on a pipeline of more than €600 million in potential investments, with more than two-thirds of those skewed towards "recovery investments" in the transport, tourism and hospitality sectors.
O'Kelly said that ISIF has invested equity in half of the 20 pandemic-related transactions and he hopes that it will not have to invest the full €2 billion as the economy recovers later this year.
Finance Minister Paschal Donohoe added that he is confident that the state will get its money back from the investments.
"We want to get back out of these investments ultimately in two or three years' time. This is a temporary phenomena. We're backing great companies who were great companies before the pandemic, they just need help to get through," O'Kelly said.
2020 Investment Returns And Total Gains Since Inception
ISIF made investment returns of 6.2% in 2020, an increase of over €500 million that was driven primarily by its exposure to global funds committed to investing in Ireland.
That brought ISIF's total gains since inception in 2015 to €1.5 billion, an annual return of 3.1%.