To take a business trip to Europe, an investment manager at Bain Capital may leave the firm’s headquarters in Boston and fly to London aboard one of Virgin Atlantic’s Boeing Dreamliners. After a few meetings in the City, they could hop onto a smaller Airbus for a short EasyJet flight to the continent.

Along the way, they would fly over housing estates, blocks of recently refurbished former bedsits and the construction site of a new aparthotel in Dublin; repossessed homes in Spain; an oil supertanker sailing across the Mediterranean; a derelict structure being converted into “environmentally sustainable Grade A offices and shared workspaces in a green and tree-lined space” on the outskirts of Paris; or the stylish showroom of an office furnishings company in Milan.

All these assets, along with the two aircraft carrying our American passenger, have one thing in common. They have been owned by Irish subsidiaries of Bain Capital, located in the young but rapidly expanding Dublin office of the US alternative investment firm, which boasts $140 billion in assets under management globally.

In just seven years, its Irish unit has grown from a peripheral vulture fund jumping on the bandwagon of bad loan sales by beleaguered banks into a much more complex, risk-hungry and discreet investor channelling billions of euro in Bain-managed funds across Ireland and Europe. The firm had purposefully kept this evolution under the radar – until today.

This investigation is based on more than 700 company documents. They were filed by subsidiaries largely named after Batman characters and 1980s pop-rock stars, which can be squarely blamed on the Dublin lawyers handling Bain’s paperwork at the Maples Group. This article also draws from sources familiar with the firm’s multi-faceted deals, none of whom was willing to be interviewed on the record for this article. 

This is the story of Bain Capital in Ireland: How it came here, what it owns, who are the Irish players on its team – and what is coming next.

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Over the quiet months of summer 2014, the small team at Broadhaven Credit Partners settled into their own new surroundings as they established the firm in a Georgian building on Dublin’s Fitzwilliam Square, which remains their base to this day. Within walking distance were all the people they were setting out to work with: Property developers, investment bankers, corporate lawyers and the seats of holding companies for various Irish businesses.

Broadhaven’s initial staff reflected its joint-venture nature. Stewart Doyle represented financier Dermot Desmond, who had injected a minority investment in the business. As a majority partner, Desmond brought to Ireland Sankaty Advisors, a subsidiary of Bain Capital specialised in lending and other forms of credit-based investments. Its European head, London-based Alon Avner, joined the founding board of Broadhaven for the first few months.

They hired David Cullen, a former restructuring banker, to invest €200 million through the new business. Cullen had worked through distressed business debt situations for Anglo Irish Bank through the period of its nationalisation and right up to its amalgamation into IBRC in 2011, before switching to a similar position at Ulster Bank. 

Bain Capital Ireland managing director David Cullen.

In 2013 and 2014, he had built up experience bringing new investors to Ireland, heading up the Dublin office of Better Capital, the British private equity fund led by finance veteran Jon Moulton. The firm was setting up a €100 million fund with the National Pensions Reserve Fund, at the time the state institution was morphing into a more active investor and turning into what is now known as ISIF.

Their SME Turnaround Fund was offering finance to take over and refinance troubled Irish businesses before they fell into insolvency. As the recovery strengthened, however, no companies offered themselves up for investment and the fund’s backers pulled the plug in late 2014. Better Capital left Ireland and Cullen was free to move on. His skills were just those Desmond and Bain were looking for. Cullen brought along Andrew Pain, who had previously worked alongside him at both Anglo and Ulster Bank.

The newly formed Broadhaven saw an opportunity in filling the gap left open by retrenching Irish banks following the financial crisis. Not only were traditional financial institutions not lending – they were lining up billions of euros’ worth of non-performing loans for sale. Of course, they were not alone in spotting this. But where other finance houses entered this country targeting a particular market niche or funding format, Broadhaven gave itself a different objective: Do everything as opportunities arise.

A €465 million deal to set the scene

The deal that put Broadhaven – and Bain – on the map in Ireland was the acquisition of two large property-backed commercial loan books from Ulster Bank three months apart in 2015. On June 26, the bank offloaded loans to hospitality businesses with a face value of €465 million to the new firm.

The portfolio included debt secured on dozens of pubs, hotels and restaurants around the country. Some were high-profile, such as the Griffin Hotel Group and its flagship luxury resort Monart in Enniscorthy, Co Wexford, or the Earls family’s business encompassing the Radisson Blu in Athlone and the East County Hotel in Ballinasloe, which had receivers appointed by Ulster Bank before the loan sale. Many smaller establishments were known mostly to their regulars in rural towns and Dublin suburbs. 

Broadhaven paid €180 million for the Coney loan book – a discount of over 60 per cent. Only €43 million came from its own investors, with the rest leveraged through a €138 million senior loan advanced by Morgan Stanley at a rate of Euribor + 3.8 per cent.

On September 30, the Bain-Desmond joint venture went back to Ulster Bank to purchase part of the Finn portfolio, covering loans to a wide array of Irish small businesses such as convenience stores, jewellers, pharmacies, garages and furniture showrooms. This time, Broadhaven channelled only its own investors’ funds into the €81 million deal without any leverage.

Over the following years, the businesses whose loans had been sold to the firm experienced diverse fortunes. Some, like the Griffin Group, refinanced elsewhere and cut off ties with Broadhaven. Some repaid their debt as the economy recovered. Others were not so lucky and have gone into liquidation. A small number remain indebted to the firm to this day. 

In one case, Broadhaven established a special-purpose vehicle to take full possession of the McWilliam Park Hotel in Claremorris, Co Mayo before selling its business to Austrian hospitality investor Thomas Röggla and the underlying property to a Davy-managed fund for a combined €9.2 million in March 2018.

Bain Capital took possession of the McWilliam Park Hotel in Claremorris, Co Mayo between 2016 and 2018.

In the four years from the acquisition of the two Ulster Bank portfolios to 2019, the subsidiary established to go through their loan books, Coney Investments Holdings DAC, had collected all the debt that it hoped to recover from borrowers. It had also repaid both Morgan Stanley and Broadhaven investors all the funds they had put in.

As a tax-efficient vehicle operating under Section 110 of the tax code, it channelled any gains back to its investors under the form of profit-participating interest on intercompany debt. Over the same period, it had returned a total of €49 million in such interest – equivalent to an annual return rate of around 9 per cent on the €124 million Bain and Desmond had originally put in. 

This corporate, financial and tax structure is typical of vulture funds and mirrors those used by other alternative investment firms such as CarVal or Cerberus as they hoovered up discounted distressed debt portfolios in Irish banks’ fire sales. There were two key differences with Broadhaven, however.

First, it had done the deals from its Irish office and did not shy away from engaging with borrowers. Where remote vulture funds ran Irish debt acquisitions from Luxembourg or Amsterdam and outsourced servicing to contractors like Pepper or Link, the businesses whole loans had been sold to Broadhaven found themselves talking directly to Cullen and his local team or to Bain’s back office in Boston.

Secondly, the firm’s prominent double Ulster Bank deal was only one side of its early business in Ireland. In fact, fire sales of bad bank loans weren’t where Broadhaven had looked at first.

Hundreds of homes and one court dispute with Maplewood

Just as they were formally establishing the firm, Bain and Desmond’s team were already working with Michael Whelan and Alex Brett’s property development outfit Maplewood Homes and its associated construction office Capami. Broadhaven first provided funding for Maplewood’s 69 homes at the Sion Hill Park housing estate on a prime in-fill site in Drumcondra, which went on sale in 2015. The project was financed through a Cayman Islands subsidiary from which no financial details are available.

The same partners were also setting up Arbor Hills Alternative Asset Fund I, a special-purpose vehicle to invest in further residential projects. As soon as Broadhaven was up and running, it took an 85 per cent interest in both Arbor Hills’ equity and debt, providing the bulk of the funds to buy the €14 million Rockville House site in Dublin’s suburb of Carrickmines. Broadhaven exited the project before Capami applied for planning permission to turn it into the Rockville housing estate in late 2017, but still pocketed most of the €3 million in intercompany interest paid out over the intervening three years.

Meanwhile, a short drive away in the more affluent Goatstown suburb of south Dublin, the same partners set out to develop the historic Knockrabo estate on the Mount Anville road into 50 houses and 69 apartments. This time, Broadhaven owned the entire project, injecting €4 million in equity and providing another €32 million in debt funding at a 12 per cent annual interest rate.

Since home sales began at Knockrabro in 2017, the project vehicle has repaid €11.6 million of the funds advanced by Broadhaven. This was all gain for the firm as, at the end of 2019, it was still owed nearly €32 million after interest – the same amount it had advanced in the first place.

Maplewood also had another site further up the M50, in Firhouse, now marketed as the Dodderbrook housing estate. There, the developer first obtained planning permission for a first phase of over 130 homes before tapping Broadhaven for capital in 2015. This took the form of a minority equity investment and €15 million shareholder loan notes, again at 12 per cent interest.

After building out the first phase of Dodderbrook, however, the partners fell out. In March this year, they engaged in a High Court dispute over the way the development should be managed, which remains unresolved to this day. Regardless, the value of Broadhaven’s investment has already doubled thanks to accrued interest – though it remains locked into the project until the loan notes can be redeemed.

Injecting capital into residential property development was to remain a key part of Bain’s business in Ireland. But from the very start of Broadhaven’s life, the firm was also plugging the other gap it had identified in the credit market: Non-bank business lending

As early as April 2014, before it had officially registered its existence in Ireland, Broadhaven extended €6 million in credit to Chill Insurance as it restructured its business and refinanced its bank debt. Company filings show that the Bain unit continued to back the broker until its takeover by UK private equity firm Livingbridge last year.

When publican and hotelier Louis Fitzgerald refinanced his own group’s debts a few months later, he, too, brought Broadhaven on board – along with his existing bankers at AIB. Then in 2015, Harcourt Hotel owners Brian and Sally McGill went to Bain Capital when they needed bridging finance mid-way through their expansion along Dublin’s Harcourt St to develop what would become the Iveagh Hotel.

In its first year of existence, the new Dublin player had already become a significant lender to the Irish hospitality industry. 

How two Kinsale hotels emerged from Nama and bad loan sales

Hotelier David Good’s two properties in Kinsale, Co Cork came out of the financial crisis caught in the cross-fire of bad debt. On the one hand, Acton’s Hotel on the town’s waterfront spent the early 2010s struggling through a multi-million-euro refurbishment while Nama was taking over its debt owed to AIB. 

Incidentally, the contractor carrying out the hotel’s redevelopment was Park Developments, and Bain Capital was about to become more familiar with Michael Cotter’s property business – but more on this later.

On the other hand, the Trident Hotel at the other end of Kinsale’s pier was indebted to Ulster Bank, which sold off its loans as part of the Coney portfolio in 2015. From then on, Broadhaven became a major creditor of Good’s hotel group – and they sat down to work together.

Documents filed by companies owning Acton’s and the Trident show that Good established a new holding structure, Jamesfort, to cap off the two hotels in January 2016. Jamesfort then took on €10 million of Acton’s debt. Three months later, Broadhaven refinanced at least this amount. Shortly afterwards, the claims held on the properties by Nama, the Coney vehicle arising out of Ulster Bank’s fire sale and Park Developments were all cancelled. 

By 2018, the two hotels were able to borrow from a traditional lender again, raising fresh finance from Bank of Ireland.

Through the second half of 2015 and 2016, Broadhaven cut a few more deals confirming the breadth of its interests.

In July 2015, Gerry Carron’s trading and property group, centred on the Noyeks Newman timber floors and panels business, reached a settlement with its bankers, reporting a €4.6 million debt write-down. Broadhaven was a key player in the refinancing deal, extending €5.6 million in fresh credit to the group. 

Around the same time, aviation tycoons Desmond and Ulick McEvaddy were cutting their losses on the primary healthcare centre they had built in Naas with local developer Ger Roche. On the day they parted ways, leaving Roche and his family as the sole owners of the building, Broadhaven lent him around €10 million to finance the buy-out.

Elsewhere on the property front, the firm was laying the foundations of a partnership with a new developer. 

Doubling the money on pre-63

Peter Horgan and Tim Cahill knew each other from working together on equities at Davy up until they decided to leave and form Lugus Capital to run their own property development business in 2013. By 2016, they had a plan that required a backer with deep pockets, lots of flexibility and a certain appetite for risk.

Their idea was to assemble a portfolio of run-down rental properties in sought-after areas of Dublin’s south city, renovate them and sell them on to institutional investors as a portfolio of high-yielding buy-to-lets.

Broadhaven was on board. With Lugus, it formed Larea Fa DAC, an investment vehicle in which the Bain-backed firm owned 77 per cent of the equity at first, ramping up to 94 per cent later. Lugus chipped in some cash and, in May 2016, the first house it had acquired for the project at 46, Rathmines Rd Upper. 

Broadhaven then opened the credit floodgates. First, it started issuing unsecured loan notes at 15 per cent interest to Larea Fa to give it the firepower to make cash purchases. After a few months, when the portfolio began to expand, the firm provided slightly cheaper additional credit at 12 per cent by securing it on existing properties. Across the two types of loan notes, Broadhaven gradually lent €31 million to the vehicle.

With these funds, Larea Fa went on a shopping spree, acquiring 32 red brick-type properties in a corridor extending from Rathgar to St Stephen’s Green by October 2017. That’s one every fortnight. Lugus provided the boots on the ground, terminating any existing leases and sending in contractors.

The first pre-63 property renovated into apartments by Bain and Lugus at 46, Rathmines Rd Upper.

Under rules applying to pre-1963 buildings, they could carry out extensive refurbishment without having to go through planning permission as long as they did not change the format of the buildings.

Grayling Properties, another company founded by Cahill, then took charge of renting out the refurbished flats to new tenants and managing the properties.

By May 2018, two years after embarking on the project, Larea Fa had a portfolio of 265 rented apartments to sell across 30 addresses. When agents CBRE put them on the market under the “Belgrave Collection” brand, they said the majority of tenants were professionals working in the tech and finance sectors. Only 18 per cent were Irish, with twice as many coming from continental Europe.

Nine out of ten apartments were studio or one-bed accommodation, a Dublin rarity in high demand among single people and young couples who do not want or cannot afford their forever home yet. At an average monthly rent of over €1,300, the entire portfolio was yielding €4.2 million annually. (Nowadays, one-bed flats in any of these buildings are advertised for rent around €1,700 per month.)

CBRE guided €60 million for the Belgrave collection. Six months later, the Dutch property investment firm Orange Capital Partners exceeded this when it made the acquisition in its first deal outside the Netherlands – and the first sale of a multi-address rental portfolio to an institutional investor in Ireland.

Broadhaven had doubled the value of its investment.

Once it pledged funding to Larea Fa, the firm had exhausted the initial €200 million its investors had committed – in just two years. Desmond chose to cash out and his pointman Stewart Doyle resigned from his directorships at Broadhaven and its subsidiaries over the summer of 2016, marking the end of the joint venture. Desmond did not reply to a request from The Currency to discuss his Broadhaven experience.

Cullen, meanwhile, wanted to keep going with the team he had begun to grow in Dublin. On June 23, 2016, UK voters decided to leave the EU, plunging Avner’s European credit desk in Bain’s London office into uncertainty regarding its future access to the Euro area. One year earlier, it had already begun to use Irish subsidiaries separate to Broadhaven to acquire non-performing loans and portfolios of repossessed properties in Spain.

The Boston-based investment firm was quickly convinced. It would stay in Ireland and turn its fledgling joint-venture here into a permanent outpost. In the meantime, its credit division had dropped the Sankaty brand to operate under the general Bain banner. In 2017, Broadhaven officially changed its name to Bain Capital (Ireland) Ltd. It also established a new subsidiary to funnel fresh capital from Bain investors into Ireland from various funds in the US and the Cayman Islands and gave it the cryptic name BCC DSS 2017.

The acronym was taken from the names of some of the firms’ global funds, marketed to investors under the label “Bain Capital Distressed and Special Situations”. It gives a clue as to the direction the Dublin office would continue to take.

The Belgrave bedsit refurbishment deal with Lugus Capital had proven so lucrative that the two firms were hungry for more. In 2016, they formed a joint vehicle with an initial capital allocation of over €1 million called Clonkeen Investment, ostensibly to bid for land the Christian Brothers was lining up for sale at the south Dublin school of the same name, but the deal fell through.

Instead, they repeated the Belgrave operation with a fresh round of rental properties. This time, Bain took full ownership of a new vehicle, Larea Fa Fund II DAC, with Lugus Capital operating the business as a contractor. The only annual accounts available for the company show that Bain provided it with €24 million in debt funding at 8.09 per cent in the second half of 2017, followed by a €6 million equity contribution. Bain and Lugus then replicated the format again with Val Issuer DAC, a new vehicle registered in 2019 which has so far reported €6 million in equity contributions from Bain.

Another vehicle, Knight Issuer DAC, received a capital injection of €33 million and used it to take control of a group of over 140 less central buy-to-lets in the greater Dublin region and in Galway, before adding more around the country. Company documents show that at least part of the portfolio was securing debt originated by Ulster Bank and sold to Cerberus as part of Project Aran in 2014. The Sunday Times reported this week, quoting the UK property website React News, that Bain and Lugus were now preparing to sell at least the Dublin region segment of this portfolio under the Apex brand for an asking price of €35 million.

As they continued to acquire older rental properties, there was some pushback. While there were some evictions during phase one of the Larea Fa project, the accommodation was substandard and many buildings were in fact vacant. Their landlords had shown no interest in upgrading them following the ban on bedsit-type accommodation a decade earlier, and pre-1963 rules put off mainstream investors focused on family residential schemes.

With this low-hanging fruit harvested, Bain and Lugus were now going into buildings that, while old and in need of repair, had more tenants in place – and the housing crisis was deepening, narrowing those households’ chances of finding accommodation elsewhere. Some properties were apartment blocks home to multiple families, and their situations got noticed.

“Renovictions” and protests at the wrong address

As they received notices to quit in preparation for refurbishments, activists and opposition politicians coined a phrase for the process: “renovictions”. In November 2017, Solidarity TD Mick Barry singled out the case of the Leeside apartment complex in Cork, acquired by Larea Fa Fund II. “They are putting 23 households, including young families, out on their ear in a market where if they look for a place, it will cost €1,000, €1,100, €1,200, €1,300 or €1,400, with queues of 50, 60 or 100 people going out the door and down the stairs. There are no homes to be had for these people,” Barry said in a Dáil exchange with then Taoiseach Leo Varadkar.

In Dublin, another apartment block, Rosedale Court, and rows of houses divided into apartments on Richmond St and other locations became the focus of activism by tenants organised under the Dublin Renters Union, led by south city independent election candidate Peter Dooley. When they staged a protest against Val Issuer in September 2019, they camped outside an office building on Molesworth St, believing it to be where the fate of affected tenancies was being decided. It was in fact the letterbox address registered by the Maples law firm to handle the vehicle’s paperwork.

The “renoviction” controversy appeared to escalate into a battle between good and evil but the reality was more nuanced. Housing activists, along with tenants who complained to the Residential Tenancies Board, argued that there were better ways of renovating a building than evicting all existing residents.

A tenant who was paying €540 per month for a flat in Rathmines claimed in his appeal before the RTB tribunal that “the real motive for seeking vacant possession was to raise the rent” – and this is clearly what happened when the refurbished property showed up later in the Belgrave Collection, grossing more than double what he had been paying. The tribunal, however, authorised the eviction after hearing that the entire building was to be stripped over a period of four to six months. In other cases, tenants who had received a notice to quit obtained a reprieve from the RTB.

By contrast, the promoters of these deals would argue that they have increased the overall quality and quantity of housing available in city centres and that some existing tenants were able to move back in after renovations – albeit at higher rents.

As for the Leeside complex in Cork, further examinations revealed that the state of fire safety in the apartment blocks did not allow for refurbishments while the tenants were in place. In 2018, Bain and Lugus ended up selling the renovated 78-apartment property to the approved housing body Clúid, which made it available to people on Cork’s social housing waiting list and to some of the property’s existing private tenants. Clúid declined to answer questions about the transaction, citing reasons of commercial sensitivity.

More recently, Lugus and Bain joined forces on another Dublin project at the centre of heated debates around housing policy – the conversion of the Rathmines House office block into a 110-bed co-living complex with shared kitchens, dining and living rooms, gym and laundrette. 

Despite objections, An Bord Pleanála granted planning permission to the project in August 2020 – just in time. Three months later, Minister for Housing Darragh O’Brien announced a ban on new co-living applications. By the end of last year, Bain had rolled out €30 million of a committed €64 million debt facility at 11.42 per cent to Blondie Issuer DAC, the holding vehicle for the Rathmines project. 

Contacted by The Currency, the founders of Lugus Capital declined to discuss their business with Bain.

Dancing with the developers: From Maplewood to Regency and Carrowmore

All the while, Bain Capital was also backing less controversial residential development. When it came to building traditional new housing for sale, the firm chose to work with Regency, a small firm founded by Aodon Bourke – a former director of developer Sean Dunne’s companies – and property finance specialist Patricia Hinch, previously of GE Woodchester Capital.

As previously reported, Regency emerged from a deal between Avestus and US private equity firm Centerbridge to develop three Dublin suburban sites they had bought in 2014 at Hollywoodrath on the northern outskirts of the city; Scholarstown in Rathfarnham; and across the street from Portmarnock train station. After three years, Centerbridge decided to exit the partnership mid-construction and sold its majority interest to Bain, who in turn chose to continue working solely with Regency. Avestus left the picture.

Bain extended €40 million in intercompany debt at a 12 per cent rate through a new vehicle called Limestone to fund the three projects. Of the 435 houses with planning permission at Hollywoodrath, the majority have now been built and sold. Similar size and progress were reported at Scholarstown Wood. Meanwhile, Regency has been building and selling 65 houses at the smaller Station Manor development in Portmarnock and Avestus’s private rental arm Havitat is lining up a block of 56 apartments for rent on the site.

There are signs that Bain Capital has been happy with Regency’s job on traditional housing developments. The Knockrabo site, as mentioned above, was initially developed with Maplewood – but it has appeared among Regency’s projects, too.

Bain is also buying Irish development land outright and, in January of this year, the firm acquired the site of Smurfit Kappa’s former south Dublin paper mill in Clonskeagh from developer Gerard Gannon – and out of Nama. The 3.4-acre property on the bank of the Dodder came with planning permission for 124 apartments, two mews houses and the refurbishment of 10 existing houses. Regency has since added it to its list of ongoing projects. Its founders declined to comment on their partnership with Bain.

If this all sounds to you like a lot of property development enabled by Bain Capital funding, you haven’t seen anything yet. In the past three years, the firm has embarked on a series of large accommodation projects with a new partner, Carrowmore Properties. And here, we’re back to the less common types of residential tenancies that tend to raise eyebrows in Ireland.

To understand the scale of the projects at stake, you need to visit Newmarket Square in Dublin’s Liberties, where a two-storey red-brick IDA business centre used to occupy the block opposite the Teeling distillery. The site is now a giant hole from which poke a forest of cranes and emerging concrete structures, amid an army of BAM construction workers.

Bain capital is funding the construction of hundreds of apartments and hotel rooms at Dublin's Newmarket Square. Photo: Thomas Hubert

There are in fact two parallel projects being built on this site – both developed by Carrowmore with Bain funding. The largest part is a 413-apartment complex that secured direct planning permission from An Bord Pleanála under build-to-rent rules this time last year. Half of them will be studios and another third one-beds. The serviced property will offer shared amenities including a gym and a cinema as well as studios for local artists.

On a corner of Newmarket Square, a section of the development includes a 151-room hotel with two restaurant or retail units, already reserved by UK-based hospitality group Whitbread for its Premier Inn chain. 

Carrey Issuer DAC, the subsidiary established to hold the combined apartment and hotel development, had received €45 million in funding from Bain as of the end of last year – nearly all of which as the first tranche of a debt facility at a rate of 10.65 per cent. Construction is expected to cost €100 million and complete in 2023, according to BAM.

Before embarking on the mammoth Newmarket project, Bain and Carrowmore had got to know each other on smaller deals. As previously reported, Carrowmore was founded by Patrick Cox and other former executives of the O’Flynn group in 2015 after they left their previous jobs in disputed circumstances.

They and Bain came on the scene around the same time, with a similar appetite for less traditional forms of investment. It was only a matter of time before they met. Their first joint project is currently taking shape on the corner of Little Mary St and Little Green St in Dublin’s busy Smithfield fruit and veg market district, where construction workers entering and leaving the site jostle for street space with forklifts ferrying crates of watermelons and onions.

Above the Staycity hoarding advertising the 343-room aparthotel coming soon under the Irish hospitality brand, a smaller sign informs passers-by that this is “a development by Carrowmore Property in partnership with Bain Capital”. The project has been in the works for at least five years but took longer than planned to come to fruition – Staycity initially hoped to open here in 2020.

Accounts to the end of 2020 showed that Bain had injected €25 million into the project vehicle (€4 million in equity and €21 million in loan tranches at 7 and 9.64 per cent interest), while AIB had provided €20 million of secured debt at 1.1 per cent. Those drawdowns represented just half of the facilities available from each of them.

How Bain became landlord to hundreds of students – and the Central Bank

Newmarket Square is not the first collaboration between Bain and Carrowmore in the Liberties. Two streets away on Brickfield Lane, they had previously developed the Brickworks student accommodation now managed by Fresh Student Living. 

The vacant industrial site previously belonged to a group of private investors who had bought it for €2 million and obtained planning permission for a 280-bed student accommodation building and associated science labs with help from Clopen Capital. In 2017, they sold it to Bain Capital for €8 million.

Over the following two years, the Bain vehicle established for this project spent another €22 million to have Carrowmore and its contractors build out the student residence (pictured). As soon as it emerged from the ground, German asset management firm Invesco bought the property subject to completion and began to pay for it. 

Between 2018 and 2019, the buyer advanced just under €50 million, grossing a gain of nearly €20 million for Bain. In its 2019 accounts, Invesco’s vehicle reported: “The building was completed in quarter 4, later than anticipated, and has been let to Students for the academic year 2019/20.”

After this roaring success, the two partners were not going to stop. In August 2018, Bain and Carrowmore launched a group of subsidiaries tasked with building three more student accommodation blocks, again to be managed by Fresh. 

Of the now completed projects, two are in Dublin, at Blackhall Place and Cork Street, and one is in Galway city centre. Their Bain-owned holding company, Tut Issuer DAC, channelled over €40 million in the firm’s funding to its individual project subsidiaries, Batarang, Commissioner and West Issuer DAC (bonus points if you can find the Batman reference behind each name).

Tut’s latest accounts to the end of 2020 booked a fair value of €50 million for the three investments. Covid-19 has hit occupancy rates, as illustrated by the Blackhall Place building – the only one of the three completed before the pandemic, which saw its rent collections cut in half from €2 million in 2019 to €1 million in 2020. None of the three has yet found a buyer. Bain, however, did not recognise the need to adjust down any of their valuations.

This is the type of situation where the firm’s Dublin presence proves crucial. Where many international investors would have walked out in the face of much lower occupancy here than in the British or American student accommodation market, resulting from Ireland’s stricter lockdowns, Cullen and his team could assess the local situation and decided to hold on. They also negotiated term extensions and covenant waivers with Bank of Ireland and Ulster Bank, which have provided tens of millions of euro in senior lending for two of the developments. 

In a twist of irony, the most reliable tenant of West Issuer DAC has been the Central Bank, paying an average €360,000 in annual rent for the past two years. An office building came with the site where Bain and Carrowmore developed student accommodation at Blackhall Place, and a spokesperson for the Central Bank confirmed that it was renting space there to accommodate off-site statutory inquiries, such as the investigation into the collapsed Irish Nationwide Building Society that has been ongoing since 2015.

The global alternative credit giant that stepped in to fill the void left by banks in the wake of the financial crisis has become the landlord of the officials tasked with sifting for clues in the debris of the crash.

While the Bain-backed property developments above receive most of their funding in the form of intercompany debt, this is purely an accounting format. In these cases, the lender also owns the equity and underlying land of nearly all projects and ultimately collects gains through profit-participating loan instruments, which are just dividends by another name (and tax status).

Yet the firm has also remained true to its lending roots, having first come to Ireland as an offshoot of Bain’s then Sankaty credit office. Following Desmond’s exit and the transformation of Broadhaven into a fully-owned Bain office, it cemented its position as a growing lender to Irish businesses.

Next in line was the McGettigan family’s hospitality group. Hit by the impact of the organised crime shooting at its Dublin Regency hotel in 2016, the business was experiencing a difficult period. A few months after the attack that triggered the bloody feud between the Kinahan and Hutch gangs, the US fund Oaktree acquired the group’s old AIB debt from Nama and outsourced its servicing to Link, leaving little room for negotiation. A smaller debt was already controlled by CarVal. The vultures were circling.

In January 2017, things came to a head when Oaktree appointed examiners to the group. Under the scheme of arrangement approved by the High Court three months later, however, the McGettigan group was given a new lease of life thanks to a loan from Bain providing over €30 million at 7.5 per cent for the following five years.

The fresh credit allowed Oaktree to recover the full €19 million it was owed and drop its claim on the Regency hotel, while all other creditors were repaid with no or minimal haircuts. The McGettigans could also afford to renovate and rebrand the Regency into the current Bonnington hotel, shaking off the image of the 2016 crime scene.

Also in 2017, the Blarney, Co Cork-headquartered transport and logistics company Masterlink was looking for finance to expand. That year, as its accounts recognised Bain charges on its assets, they also booked a “new long-term loan” of €12.5 million. By the time Masterlink refinanced with Permanent TSB three years later, the business had grown its annual revenue by 60 per cent to over €50 million. 

A similar approach led Bain to lend over €30 million to Corrib Oil in 2018. The collaboration with the Galway-based fuel distributor employing over 560 people in its network across the western half of the country continues today.

This pure lending approach also applies on the property front, where Bain Capital has been providing finance for projects where it has no involvement in ownership structures. 

British property developer U+I, for example, already had an equity partner in Colony Capital for its projects in Ireland (that is, until Colony decided to leave the country last year). When their joint ventures needed project finance for three successive office developments in Dublin, they went to Bain – first in 2017 for the planned refurbishment of the 1960s Carrisbrook House on the corner of Northumberland Rd and Pembroke Rd in Ballsbridge.

Even though the project was temporarily plagued by a dispute with its tenant, the Israeli embassy, over security during the proposed works, and is now about to be sold in its initial state, Bain still collected around €4 million in interest on the €14 million it lent to U+I and Colony between 2017 and August of this year.

Just down the street at 23, Shelbourne Rd, the same developers paid €27.5 million in 2019 for an office block sold by Aviva’s Friend First investment arm (who had acquired it three years earlier for €18 million). Again, the plan was to renovate the property, though not as extensively as it had been fully refurbished four years earlier. The building ended up providing a new home for the Israeli embassy to clear Carrisbrook House for the redevelopment that has yet to take place. Bain made a two-year loan of €17 million to the Shelbourne project at 8.5 per cent. 

In the third case – the old Ballymoss House currently being redeveloped as The Hive in Sandyford – U+I and Colony already had debt finance arranged with the specialist US lender Quadrant Real Estate Advisors. However, with no hope of filling the property with office tenants in the middle of a pandemic ahead of the loan’s term in January of this year, Quadrant sent in receivers last November to enforce its security on the property against the €19 million it was owed. The developers’ get-out-of-jail card was their now established partner Bain Capital, who jumped in and refinanced The Hive out of receivership in February.

U+I, just like seven other borrowers contacted by The Currency, declined to answer questions about their Bain Capital debt funding.

The revolving doors between Quadrant and Bain turned the other way in Galway, where Bain Capital provided short-term debt for JJ Rhatigan’s 288-apartment and 175-bed hotel Crown Square project in March 2019. Six months later, the developer replaced the bridging finance with a multi-annual loan from Quadrant.

Bain Capital lent over €30 million to Corrib Oil in 2018.

In the meantime, Bain had reconnected with Park Developments following their common involvement in the refinancing of Acton’s hotel in Kinsale a few years earlier. In June 2018, Michael Cotter had taken his group out Nama by refinancing his own debt with AIB and Bank of Ireland. Now free to raise additional funding, Park Developments quickly broadened the scope of its borrowings with Bain. The two sides signed a debt facility agreement in October 2018 through Strand Court Ltd, a Park subsidiary.

By the end of June 2019, when Strand Court closed its latest annual accounts, it reported having raised €20 million in fresh borrowings, but there are indications that this was just the beginning of a major lending spree. Since then, Bain has taken security over seven group subsidiaries and five major Dublin development properties, stretching from land with planning permission for 210 apartments in Killiney to the south, to a beachfront site in Sutton to the north where Park has just applied to increase the number of permitted apartments from 96 to 143.

The latest property developer to report joining the ranks of Bain’s borrowers was Ronan Barrett’s Garristown Venture Holdings, which owns the Charlestown shopping centre and surrounding residential development in north Dublin. Last year, a group subsidiary tasked with building out hundreds of apartments on the site refinanced a €10 million bank debt with Bain Capital.

To complete the picture of the firm’s lending in Ireland, it also holds security over assets of the animation studio Brown Bag Films and the Shannon-based aircraft maintenance company Vortex Aviation, though these are part of North American-headquartered groups and their debt may be part of global arrangements made by Bain’s head office in Boston.

In fact, when it comes to international business, the Dublin office has been looking in a different direction. 

Private equity deals remain outside Dublin

While Bain Capital has built its global reputation around private equity deals, its Dublin presence since the start has been under the control of its ever-expanding credit arm, which handles over one quarter of its assets under management.

When Bain bought the Valeo food group for €1.7 billion in May, it was helpful for the private equity team involved in the transaction to have some local colleagues at hand and an office to crash, but the deal was not driven out of Dublin.

Bain Capital Private Equity had previously gone through Ireland for another job, the twin acquisitions of Korean multi-billion-dollar botox and cosmetics manufacturers Carver in 2016 and Hugel one year later. In those cases, however, the Irish side of the transactions was a pure brass-plate operation designed to blend Bain and Goldman Sachs’s interests offshore, with no apparent local involvement. It may have been primarily driven by Goldman Sachs’s appetite for section 110 structures in Ireland.

Yet the “credit” label placed on Bain’s Dublin office doesn’t mean that its activity is limited to lending. As detailed above, it has been heavily involved in equity funding for property development in Ireland. When local deal opportunities dried up during the pandemic and stock markets remained buoyant, it also redirected part of its investments into public equities across Europe. These included property and hospitality stocks picked up cheaply as they spiralled down at the start of the pandemic, including some in Whitbread – the British hotel group that pre-let the Bain-funded hotel in Dublin’s liberties. Bain has now disposed of some of these shares at a profit, but The Currency understands that it retains a significant shareholding in Hibernia Reit, though below notifiable thresholds.

The activity detailed so far is the most granular in Ireland, where Bain’s Dublin team deals directly with local business people and deploys funding drawn from the Boston firm’s investors deep into the national economy. But this is just part of what they have been doing.

Over the years, Bain has established a suite of investment funds in Ireland, through which capital is pooled from other funds managed by its head office across the Atlantic. Once in Irish-registered vehicles like section 110 companies, Icavs or, more recently, Bain’s first Investment Limited Partnership (ILP) under recently revamped legislation, the Dublin office can easily deploy capital across Europe or beyond. 

Some of these structures are quite rigid and dedicated to securitising international collateralised loan obligations (CLOs), in other words repackaging corporate bonds from all over the world to sell them on to other investors. While Bain’s ten such Irish vehicles since 2014 have channelled large sums (nearly €4 billion securitised to date, with some since returned and more in the works), they appear fairly automatic and still report being managed from Bain’s credit office in London.

Cullen and his team have put much more of their own work into a series of overseas deals funded by units of their Bain Capital Credit Global Icav. To follow the evolution of this business, you need to go back to the vulture fund-type activity that saw Broadhaven snap up hundreds of millions of euros’ worth of distressed loans from Ulster Bank in 2015.

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The same fire sales were taking place all over Europe, and Bain Capital was very much involved. In late 2014, it had carved up an €800 million face-value portfolio of bad debt from Spanish lender Bankia with Starwood, the US hotel investment firm. Bain’s share of the deal had gone through its US-based credit arm, Sankaty, with the London office in the driving seat.

Six months later, Sankaty went back to Bankia to acquire another portfolio, dubbed Project Commander, for which it paid €30 million – just 5 per cent of its face value. This time, however, the transaction went through an Irish section 110 company called Mayfair Place Investments Holdings, after Bain’s London address. Still not exactly an Irish-driven operation, but getting closer.

The firm used the same vehicle again for two consecutive acquisitions from another Spanish lender, Banco de Sabadell, in December 2015 and June 2016. The first one, Project Chloe, bundled together moribund property development subsidiaries and associated debts. The second, Project Pirene, was a much larger loan book with over €415 million in receivables, which Bain acquired for a quarter of that.

Those deals established a pattern for Bain to hoover up bad debt across the euro area. Irish section 110 companies assembled funding from the firm with additional senior bank finance wherever necessary – €74 million borrowed from Deutsche Bank in the case of Pirene, its first such leveraged purchase through Ireland. They owned the overseas assets, including through local real estate owned companies (REOCOs) in the case of repossessed properties and ghost estates. Once collections on loans flowed back to Dublin, any profits could be channelled up Bain’s corporate structure as tax-free intercompany debt interest.

Upstream from Ireland, however, things were still messy. The Mayfair Place special-purpose vehicles (SPVs) were drawing down capital from a variety of Bain funds and sub-units, which had to be specially created in the firm’s traditional low-tax domiciles of Delaware and the Cayman Islands.

This is where the Dublin office stepped in.

Cullen and his growing team registered their Credit Global Icav with the Central Bank in June 2016. Since then, the Irish fund has established 61 sub-funds and counting – the latest two appeared in May of this year. They allow capital to flow flexibly back and forth across the Atlantic according to the investment cycle of the American products while keeping firepower ready for use at short notice in Europe with minimal complications.

This also gave Bain’s Irish-based staff a central role in pursuing deals across the continent. To deploy capital in the euro area, there was no longer any need to activate structures in London or in Boston. They could do it from Dublin.

And they did.

The Currency has identified investments made by half of the sub-funds in Bain Capital Credit Global Icav. Through Irish section 110 SPVs, they spent €3.2 billion on asset purchases from the Mediterranean to Australia, funded in majority by the deployment of €2.7 billion in capital under Bain’s own management – though bank leverage also features in some transactions.

The list shows that Bain’s Dublin office quickly expanded from Spain into Italy, Portugal and Greece to purchase more distressed debt secured on local properties. The loan books acquired in these countries had a combined face value of €10 billion, but Bain enjoyed steep discounts. The firm never paid more than half of the receivables on a portfolio’s books, and in several cases less than one tenth. It has since typically collected significantly more debt than it paid for the loans.

Some of these transactions stand out by their sheer size, but also because they pushed Bain beyond the role of a mere remote vulture fund.

The Friuli deal, for example, started in August 2016 when an Irish Bain sub-fund agreed to purchase the Italian portion of assets flogged by Heta Asset Resolution – the Austrian answer to Ireland’s IBRC. Austria had nationalised the collapsed bank Hypo Alpe Adria at the height of the financial crisis in 2009 and was still working through the wreckage. 

Bain offered €205 million for the bad bank’s property holding vehicle in Italy, rebranded as Aquileia Capital Service, and its real estate portfolio. The package also contained Eagle SPV, the Italian equivalent of a section 110 company, filled with non-performing loans. The acquisition not only gave Bain a fresh round of property-backed discounted loans to sweat for cash, but it also formed the basis of a solid presence in Italy with local staff available to help secure further deals and service more assets.

Together, Bain’s Irish and Italian teams have since made more property-related acquisitions in the country, but not only. In 2018, they refinanced the Giuseppe Bottiglieri Shipping Company out of insolvency proceedings, gaining ultimate control of the business specialised in bulk maritime transport.

When it failed to perform in the following years, the new owners turfed out the founding Bottiglieri family and began to sell off their ships – five of them between January 2020 and April 2021, according to accounts filed in Ireland. Bain’s Irish-based fund inject a fresh €9 million into the holding structure for the shipping company in recent month. Whether that’s to keep it afloat or prepare a different move has yet to be reported.

Bain’s Irish-owned Italian empire has also expanded to include a construction firm and an office furnishing business in Milan. As of last October, it was lining up a new subsidiary in Dublin to take over a 700-room hotel and conference centre in Rome.

Meanwhile, the deal that transformed Bain’s presence in Spain was the 2018 acquisition of Habitat, a long-standing developer with over 1,000 homes under way and 600 acres of land in store. The Dublin office rolled out €357 million to close the deal, which was valued at over €400 million but immediately followed by the disposal of some of Habitat’s assets.

This, however, was not a quick play to sell off valuable assets and perform a profitable exit. Bain publicly stated at the time that its plan was “to create a large real estate platform around the Habitat business”. Three years on, it has held on to the business.

Staycity's Bain Capital-funded new aparthotel under construction in Smithfield, Dublin. Photo: Thomas Hubert

Around the same time, Bain made a thundering entry into the Greek market. Piraeus Bank was offloading its Amoeba portfolio of commercial property-backed loans with €1.4 billion in receivables, which an Irish unit of Bain snapped up for just €415 million – of which it leveraged €243 million from Goldman Sachs.

In parallel to the debt deal, the Dublin team also engineered the acquisition of two local debt servicing firms, LSP Receivables Management and Special Finance Solutions, for around €1 million each. 

With this infrastructure in place, Bain’s Irish funds have gone back to the country for two more deals with National Bank of Greece in the past year, which have yet to be completed. One is the acquisition of Project Icon, a portfolio of 2,800 commercial loans with a face value of €1.6 billion, for just €239 million. With the earlier Piraeus Bank deal embroiled in a court dispute, Bain has been more prudent this time and made all interim payments to date made to an escrow account. The other ongoing transaction with NBG is for its Danube loan book with €174 million in receivables in Romania.

The third major market for Bain’s Dublin office has been Portugal, where it sealed a first purchase of non-performing loans with Caixa Geral in 2017. It was the much larger Project Atlantic deal the following year, however, that really established its presence there. 

If the SPVs used in Ireland stuck with the Batman and pop music themes (hello Beegees and Luthor Issuer DAC), those in Portugal were on another level – tens of millions of euro have been flowing through the likes of Enthusiastic Mermaid and Positive Parrot Unipessoal Lda.

Bain agreed to pay just one quarter of the €850 million in receivables lodged in Project Atlantic, and NatWest leveraged half of the deal until earlier this year. Accounts filed in Ireland show that Bain has continued to invest in Portuguese subsidiaries focused on renovating and selling properties securing defaulted loans, injecting €18 million into Atlantic-related companies across equity and debt last year.

Aviation leasing takes off

Just like it has done in Ireland, the firm has also begun to broaden its overseas reach outside property-related debt. An Irish SPV for Bain’s Launchpad fund first conducted small but very lucrative debt and equity deals in Malaysia and Australia in 2017, but this did not appear to be driven by the Dublin team. 

The following year, however, an Irish-based Bain fund injected €23 million of equity and mezzanine debt into Hirepool, a leading equipment hire company in New Zealand. Accounts filed in Ireland show that the investment wound down in the first quarter of this year, generating a €2 million gain for the fund.

Still in New Zealand, Bain took advantage of a failed merger between the country's second and third largest insurance companies to buy the stake abandoned by the would-be bidder in Tower. After buying an initial €32 million shareholding in the listed insurer in 2018, Bain’s Dublin office increased its stake with another €5 million last year. 

In the region, it also owns significant stakes in two Australian businesses: The travel software company Webjet and Judo, a challenger bank.

More recently, an Irish fund of Bain was getting ready to become a landlord in France. It placed an initial €7 million equity investment in a vehicle that committed in May to buying an eight-story office block under construction outside Paris, with a minority stake for local property management firm Hemisphere.

Bain's Irish joint-venture owns one of Virgin Atlantic's Boeing Dreamliners.

A number of Bain’s Irish entities have also entered the aviation leasing market, with three SPVs taking off in 2019 to acquire five airliners for a total of €240 million. The Boeing and Airbus aircraft are leased to airlines as familiar to Irish frequent fliers as EasyJet, or exotic as VietJet.

These wholly-owned aviation leases are in addition to a new joint venture code-named Palisade. It was formed last year in Los Angeles and Dublin by Bain Capital and Griffin Asset Management, a company founded by former Air Lease Corporation executive Ryan McKenna. With funding from Bain’s Dublin office, Griffin signed its first deal through Palisade in January when an Irish subsidiary performed a $119 million sale-and-leaseback transaction for one of Virgin Atlantic’s Boeing Dreamliners.

Griffin did not reply to The Currency’s request for an interview about the joint venture. 

*****

From three desks in 2014, Cullen’s team now occupies three floors at Bain Capital’s Fitzwilliam Square Irish headquarters. Andrew Pain, too, is still there. The Currency understands that there are around 20 people working there, having invested €2 billion to date with Irish clients across debt purchases, new lending and equity funding – not counting the yet-to-close Valeo acquisition nor aviation leasing. We can expect to hear more from more of them, in several areas.

One is non-bank lending to Irish businesses and direct investment in property development here. As Ulster Bank leaves the country, the dearth of competition will continue to open opportunities for alternative finance providers and Bain has shown clear intent to occupy that space.

Clients’ choices are not just about rates, and the flexibility shown by the firm in allowing tailor-made repayment schedules or re-purposing existing credit for new projects will be more attractive to some than cheap interest.

“Local knowledge is valuable. Someone in New York wouldn’t know Stephen’s Green from Dolphin’s Barn.”

The presence of an established team grown in Dublin from the ground up will also help. (Despite Brexit, there was never any mass exodus from Bain’s London office to Ireland and all staff here have been local hires.) As one developer familiar with Bain’s business put it: “Local knowledge is valuable. Someone in New York wouldn’t know Stephen’s Green from Dolphin’s Barn.”

The second apparent direction is that of an extension of this model to property development across Europe. The permanent businesses acquired and stabilised over recent years in Italy, Spain, Greece and to a lesser degree in Portugal are all wholly owned by Bain’s Dublin office. Alongside the latest commercial property deal with a new partner in France, they are ripe for integration into a well-structured machine to distribute more capital from the efficient fund hub established in Ireland to development projects around the continent.

As part of the compliance requirements to run this financial infrastructure independently from Boston or London, Bain Capital Investments Ireland had to obtain an alternative investment fund manager (AIFM) licence, which it did in 2019. This also allows the Dublin office to market products and raise funds from investors in the EU. Who knows, it might do just that some day.

Last but not least, aviation leasing is now emerging as the fastest-moving segment in Bain’s Irish portfolio. The pandemic has shaken up the industry, pushing some participants out and changing the way cash-strapped airlines deal with their lessees. Before this happened, Bain was already moving into the market, purchasing five aircraft in less than one year.

Aside from the sale-and-leaseback deal with Virgin Atlantic, its joint venture with Griffin has registered four more SPVs in Ireland, which have yet to report what they are up to. The current unpredictability in aviation provides the environment for the firm to thrive. 

More broadly, Bain Capital’s Irish team has perfected a business model based on filling in the gaps left by market disruption and showing flexibility to go quickly where more risk-averse investors wouldn’t dare to.

If you’re an SME owner who despairs at pillar banks repeating “computer says no”, they could throw you a lifeline. If you’re a student hoping to find a room for less than €1,000 a month, they probably won’t help you much. Either way, every time you utter the now well-worn phrase “in these uncertain times”, what they hear is: “Our time has come”.