Mr. Nick Ashmore:

Subsequent to that large withdrawal of funds, the NPRF was much smaller. From 2011 onwards, it was clear that the sense of direction from the new Government was the move towards the establishment of ISIF. The process of developing that idea, along with other changes that were made to NTMA over that time such as the creation of NewERA and the passing of a new NTMA Act, which formed a new governance structure over the agency, took place between 2011 and 2014. The fund continued to be managed. It found itself concentrated in illiquid assets at that time. There was a move to sell down the portfolios that had not been sold to fund the bank investments that were less liquid, such as private equity and real estate. The fund also started to make initial investments in strategic-type investments. It started to prototype the type of investments that ultimately ISIF would make and makes now.

We will move on to the next slide. The second fund I will talk about is the National Reserve Fund, NRF, as it is known now. It was originally characterised as the rainy day fund when it was created. The NRF was established in 2019 to put aside a pool of capital that could be used in the event of an economic shock. It had quite specific terms around when it could be used. It was initially created and funded with €1.5 billion withdrawn from ISIF. However, subsequently in 2020, Covid happened and the fund was fairly quickly used to help to support Exchequer spending in that year. The fund was reconstituted at the end of last year with an intention to use some of the surplus. It now contains €6 billion - €2 billion contributed at the end of last year and €4 billion contributed this year. It is managed very conservatively. We have a very short time horizon on the investment strategy. Currently, in Exchequer notes, we are developing a short-term investment strategy which would see it diversify into a few other asset classes, but equally low risk and highly liquid. It really is just a pure reserve for the time being. The maximum size of the NRF under the current legislation is €8 billion.

We will move on to the next slide. ISIF is the primary effort in terms of the NTMA’s investment management operations at the moment. We have the directed portfolio but, as we mentioned, that is separate. The €9 billion that we manage is the discretionary fund. That is made up of a mix of Irish impact investments and global low-risk liquid investments that act as a reserve source of liquidity to fund Irish investment or Irish-related investment as we make those. The mandate of ISIF is to invest on a commercial basis in a manner designed to support economic activity and employment in the State. It is a wide-ranging mandate. We try to have a fairly cohesive strategy to make sure we are focusing our efforts where we can actually add value rather than spreading it too widely or displacing other activity. Since its inception, the fund has committed over €6 billion across approximately 175 different investments – a mix of funds and direct investments. It has catalysed a further €9.5 billion of co-investment alongside those investments. Its accumulated return to the middle of 2021 was €2.1 billion.

On the strategy for and deployment of ISIF, we agreed with the Minister and launched the new strategy in June of last year. That is designed to see ISIF look to help the State in addressing key challenges. At the top of that list is climate; second is housing enabling investment; third is scaling indigenous businesses, which is always a core role for ISIF; and fourth is food and agriculture.

Those four investment themes form our areas of focus. They are designed to align with key Departments as key stakeholders and we have a team dedicated within ISIF to making and managing investments in each of those areas. In climate, the strategy is to try to make commercial investments that will help the State meet its targets in terms of positioning itself for a net-zero carbon economy. That involves a multistrand approach to investment across different time horizons, so as we look at the 2030 targets we are much more focused on things like renewable generation, energy storage, biogas and other things that are going to help bring the emissions down quite quickly. For the longer-term goal of achieving net zero by 2050, we are more focused on longer-term investments, maybe in earlier-stage technology growth capital companies, venture capital and that kind of thing. It is about new technologies that are going to help us bridge that much harder gap to get from 50% to 100% reduction. We set out an ambition in climate to invest €1 billion across that theme over the next four or five years and we are making good progress against that ambition right now.

The second theme is housing and we have a strong focus on supporting where we can the production of mass-market housing across the State. We invest up and down the capital structure in senior debt, mezzanine and equity. Alongside that is enabling investments and this where we are active in urban regeneration in cities around the country - not in Dublin, but in the likes of Limerick, Cork, Galway, Waterford and Kilkenny. We have laid out a €500 million ambition in that area to deploy funds into those centres across a range of investments, including not just urban regeneration, but also growth businesses and other aspects as well.

The third theme, which is scaling indigenous businesses, is working alongside Enterprise Ireland to ensure the funds are available in venture capital, growth funds and other means that can invest in fast-scaling indigenous companies. We work with strong local investment managers, but also try to bring in international managers to add to that ecosystem in order that there is comprehensive funding ecosystem for businesses to operate within where they can get access to the investment they need to grow and scale.

Last is food and agriculture. We have always had a bit of a food and agriculture capability but we have made it a dedicated theme in the last year and that is starting to pay dividends. It is a key area for the economy and the underpinning of rural society, but is also a set of industries facing an existential challenge with climate, though also a significant opportunity as well. We have world-leading food companies, a high degree of entrepreneurship and a highly-engaged and switched-on base of farmers who are very tuned in, in our experience, to the challenge of climate change and looking to respond to that. We see as much a strong commercial investment opportunity there as we do the threat of having to decarbonise.

Underpinning all that, we also maintain a degree of flexibility such that if we have another major economic dislocation such as the pandemic or Brexit, we can flex into investments in that area we might not normally look at. We operate within an economic additionality framework. We seek to have additionality in all our investments and we try to minimise, where we can, deadweight and displacements. That is really where we try to avoid displacing other economic activity or investments and we try to avoid doing things that are obviously going to happen anyway without our help. If we are to look at a compelling and national situation we would do that in dialogue with the Minister for Finance; we would not go off and do that unilaterally.

That is the strategy for ISIF. The last slide notes the level of co-investment we have achieved over the years, but also the flexibility ISIF was able to offer during the pandemic. At the beginning of the pandemic, we turned the investment strategy quite dramatically to broaden out the types of investment ISIF can do with an initial focus on stabilisation of companies. It saw ISIF invest in things like tourism and hospitality where normally the risk of displacement would mean that we would be less active. Over time and through the stabilisation investments we moved back to recovery investments and gradually moved our way back, as the economy recovered, into helping businesses recover along the lines of our main themes. That programme was active from the spring of 2020 to the summer of 2021. We then switched back and launched the new strategy to reset and go again.

That is my opening presentation. I am happy to take any questions.