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Nov 23, 2015

Irish SWF to withdraw billions from asset managers

Fund’s new mandate calls for shift to Ireland-focused investments by 2020

Ireland’s government will take several billion dollars out of the Ireland Strategic Investment Fund, the country’s sovereign wealth fund (SWF), over the next five years to spend on helping boost the Irish economy, the Financial Times reports.

The fund, which has $8.4 bn in investable assets, will withdraw funds from global investment managers but continue to invest with asset managers that have funds focused on Ireland and in other areas it considers will help the Irish economy, the newspaper reports, citing fund director Eugene O’Callaghan.

The fund currently has around $3.2 bn in global equities, bonds, commodities, infrastructure and absolute return funds with international asset managers such as BlackRock, Deutsche Asset Management, Unigestion, Acadian Asset Management and others, which now stand to lose some of the fund’s business.

‘We are implementing a strategy that will wind down the global assets over a five-year period, as we are ramping up the Irish assets,’ O’Callaghan told the FT.

The move comes as other SWFs, particularly those from oil-rich countries hit by declining commodities prices, withdraw cash from asset managers to cut costs or divert funds to prop up the economies of their home nations.

The Saudi Arabian Monetary Agency, the world’s third-largest SWF, has withdrawn $70 bn from asset managers this year while the Abu Dhabi Investment Authority, the second-largest, has bolstered its in-house teams to cut costs. Azerbaijan’s oil fund has also said it is shifting investment management in-house.

Callaghan told the FT the Ireland Strategic Investment Fund has invested about $1.1 bn of its investable funds in Irish projects so far and is looking to boost that figure. He says the fund will look for other institutional investors that want to co-invest in projects focused on Ireland.

The Irish fund has recently invested in Swerve, a US company that has promised to hire staff in its Dublin office, and KKR, which plans a housebuilding project in the country, the newspaper reports.