How to Invest in Northern Ireland

It is just one year until the UK officially withdraws from the European Union, but Brexit uncertainty prevails, causing headaches for investors.

However, one recent announcement has sparked a wave of investor interest in an unlikely corner of the UK – Northern Ireland.

In early February, leaked documents revealed plans for Northern Ireland to stay in the EU customs union post-Brexit[1], raising the possibility of ‘special status’ for the province.

While these plans have not yet been confirmed by the British government, they have already been greeted with optimism among the investment community, who can see a post-Brexit scenario in which Northern Ireland could act as a bridge between the UK and EU markets.

In theory, this could open the door to enormous growth across Northern Ireland’s already substantial business community and financial sector.

So how can you invest in Northern Ireland?

Invest in… Northern Irish stocks and shares

Only two Northern Ireland based companies are listed on the London Stock Exchanges: Kainos and First Derivatives.

Belfast-based software company Kainos has doubled its share price since it went public in June 2015, posting near-consistent growth over the past 18 months[2]. By 20 February 2018, its one-year returns were an impressive 68.07 per cent.

Meanwhile First Derivatives – a Newry-based consulting and software services group – has spent the past year breaking its own share price records.

As of 20 February 2018, it had posted one-year returns of 67.25 per cent, three-year returns of 196.84 per cent, and five-year returns of 533.74 per cent[3].

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Invest in…Local businesses

Small and medium sized enterprises (SMEs) employ 75 per cent of the Northern Irish workforce[4] and contribute 75 per cent of the turnover in Northern Ireland’s private sector.  By comparison, in the UK as a whole, SME turnover in the private sector is less than 50 per cent.

However, according to a recent report by accountancy firm Harbinson Mulholland[5], 72 of the top 100 businesses in Northern Ireland are either family-owned or locally owned. This can make it harder to invest in some of the most successful companies, for instance Almac (which carries out biotech and pharmaceutical research and development), Norbrook (which manufactures veterinary products) and W&R Barnett (a 122-year-old grain export firm).

However, while it may be tough to invest in the region’s best-known SMEs, it is by no means impossible.

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Government-subsidised Invest NI offers a series of growth and development loans to local businesses, and some of these loans are open to private investment.

CoFund NI II is a £50m equity fund which is open to venture capital funding, and private funding from high net worth and sophisticated investors.

Techstart NI is a £29m suite of funds which provides seed funding for NI-based start-ups and university spin-outs. And the £50m Growth Loan Fund – administered by Whiterock Capital – provides funding to Northern Irish SEs in the manufacturing, engineering, or tradable services sectors.

Invest in… Property

Property investments have always been popular across Northern Ireland, particularly in the buy-to-let sector. And while many NI property investors were burnt in the 2008 property crash, the market has well and truly rebounded.

In 2017, Northern Ireland’s property sales were up by 25 per cent year on year[6], while residential house prices increased by two per cent over the same time period.

Despite this recent growth, Northern Ireland is still one of the cheapest places in the UK to buy property.

According to research by Nationwide Building Society, the average UK property was worth £211,156 in December 2017, but the average home in Northern Ireland was just £131,989[7].

In fact, outside of Belfast, investors can buy town centre properties for as little as £18,000[8].

Invest in… Alternative lending

Crowdfunding and peer to peer (P2P)lending have become increasingly commonplace across Northern Ireland, as alternative lenders race to fill a gap in the market.

P2P research firm Orca, P2P-facing broker Clearpath Finance, and SME lender Linked Finance have all based themselves in Belfast city centre, while US-based fintech firm Hanweck recently chose to have its European headquarters in the city.

In January, leading P2P platform Assetz Capital opened a new office in Belfast, citing the “massive opportunity” in the local business and personal lending market[9].

Within the crowdfunding space, CoFunder[10]has helped a number of small businesses extend their reach by offering relatively small crowdfunded loans (usually between £5,000 and £10,000) with projected interest rates of seven per cent and above.

Crowdfunder.co.uk funds even smaller projects with a focus on the arts, although the rewards for investors can vary considerably, depending on the project.

[1]https://www.theguardian.com/uk-news/2018/feb/09/northern-ireland-will-stay-in-single-market-after-brexit-eu-says?CMP=Share_AndroidApp_Tweet

[2]http://www.hl.co.uk/shares/shares-search-results/k/kainos-group-plc-ordinary-0.5p

[3]http://www.hl.co.uk/shares/shares-search-results/f/first-derivatives-plc-ord-gbp0.05/share-charts

[4]https://www.fsb.org.uk/docs/default-source/Publications/the-contribution-of-small-businesses-to-northern-ireland.pdf?sfvrsn=1

[5]https://www.harbinson-mulholland.com/family-business/ni-family-business-forum/18/new-top-100-list-reveals-nis-most-profitable

[6]https://www.irishtimes.com/business/economy/northern-ireland-s-property-investment-market-rebounds-in-2017-1.3342937

[7]https://www.belfasttelegraph.co.uk/business/uk-world/northern-ireland-house-prices-up-2-in-2017-to-an-average-of-131989-36459356.html

[8]https://www.propertynews.com/Property/Omagh/WAN670159/19-Castletown-Square

[9]http://www.p2pfinancenews.co.uk/2018/01/30/assetz-capital-northern-ireland

[10]https://www.cofunder.co.uk


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Last updated: May 22nd, 2018

Kathryn Gaw

Kathryn Gaw is a financial journalist based in Belfast, Northern Ireland. She has been writing about personal finance and investment trends for more than a decade, and her work has been featured in the Financial Times, City A.M., the Press Association, and The Irish Independent, among many other publications.

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