Minister Paschal Donohoe, TD Speech - Institutional Investment in Private Capital

Check Against Delivery

Good afternoon.

I would like to begin by welcoming you all here today. In particular, I would like to welcome our international guests from the United Kingdom, Finland, Denmark, the Netherlands and the United States.

This truly is a very international audience, and it is a privilege for us to welcome you to Ireland, particularly those of you that will be taking part in one of today’s panel discussions.

Today’s conference is designed to explore ideas around the allocation of institutional investment in alternative assets such as venture capital, private equity, and private debt.

Each of these assets classes provides a vital source of funding for Irish businesses to develop innovate products, and expand into new markets.

To discuss this theme, I am delighted to see today that we have speakers from a number of European funds, which seek to diversify their portfolios by investing in these asset classes, and members of the venture capital and private equity community that invest directly in some of Europe’s most exciting businesses and sectors.

These are businesses that may not have the bricks and mortar-type collateral of more traditional businesses, and therefore cannot access more traditional forms of finance.

Their collateral is their ideas.

Their collateral is their ability to make these ideas a reality.

This is why we need investors that are effective at interpreting the innate qualities of high potential businesses, and who can allocate the capital to those businesses with the highest probability of success.

It is my hope that by bringing together both the institutional investors and private capital funds, that we will see a cross-pollination of ideas. And I hope that you, the audience, leave here today with valuable insights into how institutional capital can be directed towards high growth sectors such as FinTech, BioTech, Life Sciences and ICT.

It is my belief that institutional investors could in the future prove to be an even greater source of funding for these aspiring businesses hoping to compete and grow at a global level.

According to statistics from the Irish Pensions Authority, Ireland had approximately 611 defined benefit pension schemes in 2017, which in total, held assets under management of approximately €64 billion.

By comparison, the technology consultancy firm, TechIreland, estimated that the total value of seed and venture capital invested in 2017 reached nearly €660million.

Therefore, a small allocation, in percentage terms, by institutional investors could have a material impact on the level of equity funding that flows to Irish businesses.

We hope today that we can explore how greater levels of investment in high potential Irish businesses can create employment growth and benefit the wider Irish economy, while also diversifying the portfolios of those investors that choose to invest in such opportunities.

The Government’s Role

The Government continues to play its role to increase the availability of growth finance for high potential Irish companies.

In the latest iteration of Enterprise Ireland’s Seed & Venture Capital Scheme launched this year, this Government made €175 million available for co-investment in innovative Irish companies.

This is in addition to the €622 million that the Irish Strategic Investment Fund has committed to Venture Capital funds between 2015 and 2018.

As part of the ‘Ireland for Finance’ strategy which was launched by my Department in April of this year, Minister Michael D’Arcy and I have committed to position Ireland as an attractive global destination for private equity funds.

The Department of Finance will progress legislation on limited partnerships to support the development of growth finance, and will provide updates to the Joint Committee for IFS on the progress achieved.

In fact, this very event emerged from work conducted by my Department while researching the availability of growth finance in Ireland.

As part of the IFS2020 strategy, the Department’s Banking Policy Division and the Shareholding and Financial Advisory Division have been actively engaged in research in this area, and are aware of the valuable role institutional capital plays in other similar sized European countries.

To my earlier comment on the importance of connectivity, we hope this event will in itself help to bring about greater collaboration at a local, European and Global level.

However, despite the broad scope of measures implemented by this Government, according to one survey conducted by the National Development Research Council, attracting seed capital is the number one challenge facing young Irish businesses.

Ensuring there is access to adequate levels of growth capital will prove vital if Ireland wishes to remain as a competitive knowledge economy.

It is clear that there is still work to do, and I will continue to engage with my colleague, the Minister for Business, Enterprise, and Innovation, Heather Humphreys to explore new ways in which this Government can improve the availability of growth capital for pioneering Irish businesses.

Finally, events such as this do not come together without considerable effort from those involved, so I would like to pay a special thank you to Investments & Pensions Europe for co-hosting this event, the sponsors, all the speakers and panellists, and in particular, John O’Sullivan for his efforts in making this event come together today.

I would also like to thank you, the audience, for attending. I hope the discussions prove illuminating, and that they will provide an opportunity for you to gain new insights into the private capital sector both here in Ireland and abroad.

Thank you.

ENDS