London firm circles former GE Irish subprime loans

London-based investment firm Chenavari is understood to be involved in advanced talks to buy a portfolio of mortgages that originated from US group GE Capital's former €600 million Irish subprime loan book.

Sources said Chenavari may be acting with Dilosk, the Dublin buy-to-let lender which started off in 2014 by buying the ICS Mortgages brand and some €223 million of performing loans from Bank of Ireland. Chenevari recently took a minority stake in Dilosk and has signed up to fund mortgages through the Irish company.

Dilosk, which has securitised and issued bonds against the original Bank of Ireland portfolio, began lending earlier this year and its chief executive, Fergal McGrath, has a stated ambition that the company will be the country’s “undisputed leader” in the buy-to-let market by 2020. Dilosk has said it planned to return to the securitisation market as soon as it had issued €200 million of new loans.

Subprime loans

Permanent TSB came close to acquiring up to €100 million of the former Irish GE subprime loans last year before pulling out. The portfolio, made of performing loans, accounted for a part of the €600 million mainly troubled loan book that GE sold at a deep discount in 2012 to Australian financial firm Pepper in a deal backed by Goldman Sachs, the Wall Street investment bank.

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While Dilosk is likely only to be interested in buying a performing portfolio, industry sources said that Chenavari may also have an appetite for soured loans within the former GE book. KPMG has been advising Pepper and Goldman Sachs on options for the loan book for the past year.

Benoit Pellegrini, a partner and portfolio manager at Chenavari, declined to comment, while a spokeswoman for Dilosk and spokesmen for Goldman Sachs and Pepper each declined to comment.

The €600 million loan book was acquired for 40 cent on the euro in 2012, according to reports at the time.