AIB and Bank of Ireland pump €70m into fund to back builders

Irish lenders AIB and Bank of Ireland will invest a combined €70m in Avenue Homebuilder Capital Solutions Fund, a State-backed vehicle to fund house builders. The banks will each invest €35m in equity into the Homebuilder Fund, which is managed by Avenue Capital and was seeded by the Ireland Strategic Investment Fund (ISIF) with €150m last year. The vehicle will have capacity to fund the acquisition of land with capacity to deliver in excess of 12,000 units, Avenue said in a statement announcing the deal. Separately, the Homebuilder Fund has agreed an investment of €100m in a joint venture with property developer Castlethorn to help it scale delivery of new schemes. Read more Builders now earning more and working fewer hours than at start of decade Co-head of Avenue Europe Funds, Pádraig Moore, said the funding from AIB and Bank of Ireland was a further 'strong indication' of efforts to ramp up the funding required to make real inroads into the country's housing needs. 'Avenue is delighted to partner with Bank of Ireland and AIB to provide much-needed equity capital to leading Irish home builders. Castlethorn is a prime example of the high-quality home builders we are partnering with, bringing a proven track record, a highly experienced team and a clear focus on delivery,' Mr Moore said. Managing director of capital markets at AIB, Cathy Bryce, said the equity funding will help to deliver new homes and wider benefits for communities across the country. Chief executive of Bank of Ireland's Corporate and Commercial Banking division, John Feeney, said the bank is already a major lender to the residential development sector. 'But we know that increasing housing supply requires a mix of funding solutions. Equity finance can help established Irish home builders scale up their operations, invest in growth and bring forward larger development pipelines,' he said. The push to back builders comes after official figures showed that housing supply in the second quarter of this year was down 4pc to 8,823, despite widespread acknowledgement of the massive demand for new homes and a decade-long succession of government initiatives. Read more More to life than the points race: your guide to in-demand apprenticeships that could lead to six figure salaries While completions are expected to pick up through the rest of the year, the numbers remain well below target. Under the most recent official targets, Ireland should be building around 50,000 new homes a year rising to 60,000 by the end of the decade. Credible estimates indicate this year's tally is likely to be in the region of 40,000 to 43,000 completions with no indication that 2027 will see a significant pick-up from there.