Goodbody Stockbrokers has raised £13 million (€19 million) from its private clients to help fund the purchase of a 36-acre residential site in the Waterside area of Derry.
The money has been raised as a loan note provided to a company called GSB Guernsey Trading, which is developing the property. The loan notes have an agreed interest rate of 17 per cent a year over a two to three-year period.
Called Crescent Link, the Derry site was bought last month by GSB Guernsey Trading for £46.1 million plus costs and working capital of £5.6 million.
Ulster Bank has provided senior debt finance of £32.3 million, while GSB Northern Ireland (GSB NI), a company owned by other Goodbody private clients, is providing £6.4 million in equity.
GSB Guernsey is jointly owned by GSB NI and the Orana Group, which is controlled by John Farmer, a commercial and residential property developer based in the Channel Islands.
GSB NI was set up in February 2006 as an investment vehicle for the Goodbody Northern Ireland Fund, which, on the completion of the Derry, has spent £27.4 million on acquiring five properties in the province. It is now fully invested.
The Derry property currently has planning permission for 331 residential units and a neighbourhood shopping facility.
It is understood, however, that GSB Guernsey Trading will seek to have the site rezoned for more extensive commercial use and will also apply for permission to build more homes.
It is situated about four miles from Derry's city centre between Altnagelvin Hospital, the new Lisneal College that is under construction, and the Crescent Link Retail Park.
"It is the strong view of the directors of the company that the Crescent Link site is one of the best greenfield sites in the Waterside area of Derry," stated a document circulated to Goodbody's clients.
Any windfall from the investment will be subject to capital gains tax in the republic, which currently stands at 20 per cent.
In total, Goodbody has raised about €100 million from its private clients to fund projects in Northern Ireland over the past 12 months.
Other investments include a link-up with Taggart Holdings, a leading builder in Northern Ireland, to acquire a portfolio of sites close to Belfast's city centre owned by Fraser Estates for £88.3 million. GSB NI invested £5 million equity in the deal and Taggart anticipates developing 785 units on the five sites.
