Ireland’s €8bn sovereign wealth fund has invested in a specialist fund lending to domestic whiskey distilleries and related businesses.

The Ireland Strategic Investment Fund (ISIF) backed the €10m launch of Ilen River Partners’ Irish Whiskey Growth Fund earlier this month, aiming to tap into the “fastest growing spirits sector in the world”.

“Whiskey businesses need to lay down stock early in their development in order to scale,” the fund said. “However, given the long-term nature of the whiskey sales cycle, the businesses require financing solutions suited to a long time horizon to achieve scale.”

The whiskey fund will provide loans to businesses secured against existing stock. Ilen River Partners said it would not seek to appoint its own directors to businesses or take control away from existing owners.

Ilen River – founded earlier this year by Fearghal Ó Ríordáin, a former partner at private equity firm Scottish Equity Partners – has appointed three whiskey experts to provide “strategic commercial advice and access to industry knowledge and expertise”.

Ó Ríordáin said: “Whiskey distilleries are playing an ever more vital role within the Irish economy. There were just two whiskey distilleries on the island in the early 1980s. There are now 18 distilleries in operation, with more distilleries in the pipeline, all contributing to Irish tourism, agriculture, trade and exports.”

Irish whiskey exports were forecast to exceed €850m a year by 2020, he added, compared with €400m in 2015.

One of the ISIF’s core aims is to boost domestic investment and support job creation in Ireland.

In the past 12 months it has backed two US technology firms expanding into the country: Vectra and Nautilus Data Technologies.

In March the ISIF partnered with the China Investment Corporation to create a $150m technology fund.

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