The National Pensions Reserve Fund is to commit up to €500m to three new funds set up to invest in Irish businesses, provide loans and help restructure troubled SMEs.
The creation of the funds was announced by the Minister for Finance Michael Noonan in the 2013 Budget.
In a statement the NPRF, said it was providing €500m to three separate funds which are also seeking to attract private investment of up to €350m.
The SME Equity Fund will have a total size of €300-350m and will focus on investing in healthy businesses who want to grow. The NPRS has a commitment of €125m towards the fund, which is being managed by Carlyle Cardinal Ireland in Dublin.
The second fund, the SME Turnaround Fund, will have access to €100m - with €50m coming from the NPRF - and will invest in underperforming companies which are near the point of insolvency, but have the potential for financial and operational restructuring. It is managed by Better Capital, which will set up a Dublin office.
The SME Credit Fund is the third of the new initiatives and it will have an initial fund size of €450m, with a NPRF commitment of €175-325m depending on the amount of third party investment raised. This fund will lend to larger SMEs and mid-sized companies and will be managed by BlueBay Asset Management.
''This substantial commitment by the National Pensions Reserve Fund represents a significant step towards the future objective of focusing on investment opportunities in the Irish economy while at the same time earning commercial returns,'' commented the NPRF's chairman Paul Carty.
''SMEs are the backbone of the domestic economy and we believe that the development of these new financing options will enhance their ability to contribute to economic recovery,'' he added.