Finance Ireland has accelerated its plans to enter the residential mortgage market, agreeing a deal to buy the mortgage origination business of Pepper Money in Ireland for an undisclosed sum.
Finance Ireland's backers include the Ireland Strategic Investment Fund and it has been focused on the likes of motor finance and SME loans up to this.
The company said that a €200m Irish residential mortgage loan portfolio, consisting of about 900 performing mortgage loans originated by Pepper Money over the past two years, will also form part of the deal.
It added that the existing terms and conditions of the loans transferring to Finance Ireland will be unaffected.
Finance Ireland, which was established by Billy Kane in 2002, has a workforce of about 115 staff and reported lending of over €430m last year.
Billy Kane said today's deal will greatly accelerate Finance Ireland's entry into the Irish residential mortgage market.
He confirmed that there are further plans to broaden out the mortgage product range next year to compete with the main retail banks here.
The company will distribute these mortgage products exclusively through regulated mortgage intermediaries, he added.
A limited number of Pepper employees are expected to transfer to Finance Ireland when the transaction closes.
Pepper Money said today's deal does not include its commercial lending business, which Pepper said it intends to continue expanding and will incorporate into its growing servicing business.
It said the decision to sell its Irish residential mortgage business is part of the implementation of a significant new European strategic plan to grow its loan servicing business across Europe.
Pepper Money also said today's agreement will not impact its current customers whose terms, conditions and contact points will remain the same.
"Under the agreement, Pepper will continue to service the existing loans on behalf of Finance Ireland, as well as loans originated in the future," a statement from the company said.
"Customers with pending applications with Pepper Money Residential will be contacted directly by Pepper with further information on their applications," the statement added.
Cormac Ryan, CEO of Pepper in Ireland said, the deal with Finance Ireland is a very positive reflection on the success of the company's residential mortgage offering since its launch in 2016.
He said it also reflects the strength of Pepper Money's residential mortgage platform and the quality of its residential team.
"We look forward to maintaining a close working relationship with Finance Ireland in the future and, as a servicer, supporting their growth ambitions as a new residential lender in the Irish market," Mr Ryan said.
"We have ambitious plans in place for our servicing business and look forward to growing and developing this, and the incorporated Commercial Lending business, into the future," he added.
Pepper Ireland employs about 400 people and has €16 billion of assets under management as at January 2018.
