Tiarnan O'Mahony's banking venture, International Securities Trading Corporation (ISTC), has made its first foray into the US with plans to raise $50 million - $100 million (€39.7 million - €79.5 million).
The company, just over a year in existence, has asked Merrill Lynch to arrange the finance from the US private placement market. The mandate instructs Merrill Lynch to raise $50 million, but this may increase to $100 million, according to US sources.
The company has a BBB rating from Dominion Bond Ratings Service (DBRS), a high rating for a start-up, which should increase the numbers of institutions prepared to subscribe to the offer. Speaking yesterday to The Irish Times, Mr O'Mahony said the money would be used to fund the business in 2008. He said fundraisings would also be undertaken in the UK, Germany and possibly the east Asia.
He said buying money was the company's "stock in trade" and the latest fundraising had no connection to the company's future plans, including a possible stock market listing. He said this was on the long-term agenda, but not a short-term concern. He said he wanted to a have a range of funding sources and now was the right time to access US dollars.
Mr O'Mahony raised € 145 million from more than 200 wealthy investors in a private placing at the end of June last year. Since then, Goodbody Stockbrokers has operated an unregulated grey market in ISTC share units. It is understood they have performed well and doubled in value. It is understood that among the 200 wealthy individuals involved are Denis O'Brien and former Anglo Irish Bank chief executive Seán Fitzpatrick.
ISTC raises debt finance on the capital markets and lends the money to banks and insurers as Tier 1 and Tier 2 capital and other financial instruments.
The private placement market is an important source of long-term funds for US corporations and increasingly for foreign firms. Europe has not been as active in developing such a market, due to differences in regulation.
The main advantage for a foreign firm in the US private placement market is a competitive interest rate. But using the US market also means that borrowers can avoid the time and expense of SEC registration for the public market by placing securities directly with institutional investors.
