ICS Mortgages could be back in the game as dad of Wimbledon wild card bows out

French hedge fund manager Loïc Féry understands the art of probability better than most. But even he would have struggled to price the chances of his son Arthur – who entered the Wimbledon men’s draw as a world No 114 wild card late last month – making it all the way to the semi-finals. The 24-year-old scion, playing under the UK flag after the family moved to London while he was a youngster, earned £900,000 (€1.06 million) before his surprise run came to an end last Friday. It’s small fry for Féry senior, co-founder of Chenavari Investment Managers, one of Europe’s major credit specialists, with almost $6 billion (€5.24 billion) of assets under management. A week after junior bowed out of Wimbledon, it emerged that senior is exiting an investment in the company behind ICS Mortgages , Dilosk . The Irish group is being sold on to Pepper Advantage , the loan services company for tens of billions of euro of loans bought by investment firms in the wake of the financial crisis. It is also used by some mainstream banks for certain portfolios. The investment may have been a rounding error in the world of Chenavari. However, the firm had been looking for an exit for years, having sold more than half its peak 30 per cent stake in 2021 before reducing it again two years later to 9.99 per cent. Dilosk’s founders, Fergal McGrath and his brother Oran, increased their holdings in the process to a combined 57 per cent, according to the most recent company filings. The sale price is unknown. However, there is little doubt that Dilosk shareholders – also including UK-based Attestor Capital, which owns almost 20 per cent – missed the best window to sell five years ago, when nonbank lenders were funding themselves cheaply in an era of ultra-low rates and competition had taken a hit as Ulster Bank and KBC Bank Ireland quit lending. [ Pepper to buy ICS Mortgages parent Dilosk in return to providing home loans Opens in new window ] Dilosk’s new lending soared more than 140 per cent in 2021 to a record €520 million, leaving it with a 5 per cent share of the market that had grown at a much slower rate of 25 per cent. It set out at the end of 2021 to at least double its market share over the following three years. Within months, however, borrowing costs in global bond and wholesale markets – where nonbank lenders raise their funds – began to spike in anticipation of a slew of European Central Bank (ECB) rate increases, aimed at tackling inflation. By the end of 2022, ICS was all but out of the owner-occupier lending game after hiking rates and restricting new lending to 2.5 times borrowers’ gross income, compared with the then prevailing 3.5 times cap set by the Central Bank for most loans. Will the State’s plan for the Carlton Cinema site revitalise O’Connell Street? Listen | 25:33 Dilosk moved in 2024 to lower rates and ease the loan-to-income cap. It also began to target niche areas by extending periods for borrowers until the age of 80 and launching a bridging loan product, heralding a return of a short-term lending offering that vanished across the Irish market in the wake of the crash. Nevertheless, its general rates are among the highest in the market. Its three-year fixed rate for a loan of up to 80 per cent of the value of a home, for example, stands at 5.2 per cent. The market-leading rate for this category is 3.35 per cent at PTSB. There are also even lower-priced mortgages out there for homes with high energy ratings. Multiple industry sources say the technology system used since 2024 by ICS – or, rather, the loan service provider it uses, BCM Global – for dealing with mortgage brokers is difficult to use, affecting business levels. They estimate that Dilosk wrote well below 1 per cent of new loans in the market last year and has been overtaken by Nua Money , the newest nonbank lender on the block, whose integrated digital system is said by sources to be much faster and user-friendly. [ Dilosk completes €230m securitisation deal on by-to-let loans Opens in new window ] The combination of Pepper and Dilosk, which came as a surprise to many industry observers, could give both a fresh lease of life. Pepper Advantage entered the Irish market in 2012, then under the ownership of Australia’s Pepper Group, and went on over the next decade to build the largest mortgage servicing business in the State, managing almost €25 billion of client assets. The firm dipped briefly into mortgage lending in 2016, but exited again two years later, selling its €200 million portfolio to Finance Ireland . It had good reason. It was taking on enough business at the time managing loans that were being traded. And there was a branding issue with a firm associated with so-called vulture funds lending under the Pepper name. Pepper Group sold Pepper Advantage, which also has operations in the UK, Spain and India, to JC Flowers in 2025. The Irish business had already seen its assets under management fall to just over €20 billion by that stage, driven mainly by borrowers paying down debt and some portfolio disposals by clients. It has been working on a number of new lines of business to diversify as the post-crisis era of large non-performing portfolio sales fades. The Dilosk deal will allow it to set up ICS as a platform or service for institutional clients of Pepper to fund home loans. Pepper will retain the ICS brand, which goes back 160 years, and management team, led by McGrath. It would be expected to take over servicing the loans from BCM Global, which would allow it to expand its original business. [ Pepper plans new revenue lines as era of large loan sales ebbs Opens in new window ] The transaction should open up a range of funding options for ICS – particularly as the Middle East conflict fuels uncertainty over where central bank rates will end up. “Pepper could turn Dilosk into a serious lender, given the amount of institutional funding it could channel,” according to Karl Deeter, chief executive of OnlineApplication, a mortgage and life insurance solutions fintech. “It could drive innovation in the market and potentially become the fourth pillar in the market.” Revolut Bank , which has been widely seen as the next big potential mortgage market disrupter, continues to keep the industry guessing over the timing of its home loans launch. The bank, with 3.4 million customers in the Republic, initially targeted a roll-out late last year. Advantage, ICS?