Buy-to-let lender Dilosk buys former GE Capital Irish mortgages

Specialist buy-to-let lender Dilosk, which bought Bank of Ireland’s ICS Mortgages brand in 2014, has acquired €160 million of owner-occupier loans that originated from US group GE Capital’s former Irish subprime loan book.

Dilosk chief executive Fergal McGrath says the 1,200 performing mortgages involved in the traction will continue to be serviced by the asset servicing arm of Australian financial firm Pepper, which bought GE's €600 million Irish mortgage portfolio at a 60 per cent discount to par in 2012 in a deal back by Wall Street giant Goldman Sachs.

Dilosk, in which London-based investment firms Chenavari and Attestor Capital own minority stakes, financed the deal with its own and shareholders' money as well as backing from two international banks, whom Mr McGrath declined to identify.

Mr McGrath said the company may refinance the newly-acquired loans by issuing bonds backed by the mortgages, similar to a so-called securitisation deal carried in 2015 on the €223 million ICS mortgage portfolio it acquired the previous year.

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The former GE loans that Dublin-based Dilosk has acquired in two transactions in recent months comprise mortgages that continued to perform throughout the financial crisis and debt that had been restructured, having run into problems during the downturn.

Lending business

Earlier this year, Dilosk launched a new lending business specialising in buy-to-let loans with an initial facility of €200 million under the ICS brand, which is available to individuals, companies and pensions. Mr McGrath said while he wouldn’t rule out entering the loans market for family homes, the company has “no immediate plans” to do so.

“The latest acquisition further strengthens Dilosk’s mortgage business and supports our ambition of being a leading mortgage lender in the Irish market,” said Mr McGrath. “This is part of the company’s long term growth plan, targeting both existing performing mortgages in addition to new lending where we currently specialise in the residential investment property market.”

He said that Dilosk remains in the market to acquire more mortgages, but declined to comment on whether there are more deals currently in the pipeline.

“We are always looking at opportunities for other loan books,” Mr McGrath said.

It is likely that Pepper and Goldman Sachs will seek to sell further former Irish GE loans in time. The Australian firm may recycle capital released from such transactions to support its own fledgling Irish lending business.

The Irish Times previously reported that Permanent TSB, the 75 per cent State-owned bank, came close to acquiring up to €100 million of the GE-originated mortgages last year before pulling out.

Meanwhile, it was reported this week that Dankse Bank is considering the sale of more than €2 billion of performing Irish owner-occupier and buy-to-let mortgages as the Copenhagen-based group continues to wind-down its Irish retail business to focus solely on corporate and institutional clients.