Mr. Nick Ashmore:

The best example is the NPRF, which really was 99.9% internationally invested right up until the point when it was first used in bank investments. It had made some investments in Irish venture capital firms alongside Enterprise Ireland from about 2006 onwards. It saw a good commercial opportunity in those investments. It was able to invest internationally and domestically. However, the Commission was very much of the view that it needed to diversify outside the State as a balance to the risk within the State and so there was a strong logic in investing almost all the fund internationally.

When we look at different countries around the world and the different approaches to sovereign wealth management, there are a number of different types of fund that we commonly see. Singapore is probably the best example. They have the central bank, the Monetary Authority of Singapore. That contains the country’s liquid reserve, day to day, to protect the currency. They have Government of Singapore Investment Corporation, which is their long-term savings fund. It is equivalent to the NPRF and, potentially, this new fund. That is very actively invested globally, fully diversified and very intensively managed. They have a state pension fund that is really just to fund the state pension. Then they have Temasek, which is their equivalent to ISIF, a sovereign development-type fund. It does invest much more internationally because Singapore is a small economy and a fund that size would have the impact of blowing up the economy if it was largely invested there.

The ISIF is much more appropriately sized for the opportunity set in Ireland but even with that, we are unlikely to get the whole €9 billion invested here. Certainly, some of it is destined for the Land Development Agency but also we will need to keep cash reserves and liquidity to be able to manage the portfolio. Without overblowing the capacity of the ISIF team, because we run a tight ship with an investment team of about 45 people, we are exploring the limits of what we can deploy commercially using sovereign development funding in the Irish market. Looking to another fund to duplicate or replicate any of that activity I think would be a duplication and would not be necessarily as efficient. That is not to say that the new fund would not in time find opportunities in Ireland that make sense, or it might be globally diversified in passive equity investing and would include Irish stocks.

Unlike most countries that have sovereign funds, we have a sovereign development fund. In a way, we are at the forefront in that respect. It is unusual to have a sovereign development fund. The European model is more to have national promotional financial institutions like KfW in Germany or the CDP in France. Other countries around the world have sovereign wealth funds and potentially have sovereign development funds. Nigeria has one fund but three portfolios. It has domestic infrastructure, long-term savings and some reserve activity as well, all under one roof.