In this market, it is pretty difficult to launch a lender which is unique. However, the market is generally well served, and many parts of the market are very competitive indeed. So does the lending space need another bridging lender? If any new entrant proposes to compete with what currently exists, we feel the answer is no. Service, speed of execution and price are all things to be good at for sure but using these points as ‘USP’s’ feels a little disingenuous. These things are the baseline if you want to participate in the space. If you want to stand out, you must do something more.
When we looked at the market in detail, we felt that there were three areas of the bridging market that stood out as potentially being underserved:
Large parts of the bridging market put limits on the £ amount they lend. The reason behind this is often down to the funding mechanism sat behind a particular business. The funding line often requires a degree of granularity or has allocation limits. There is nothing wrong with this. It is understandable and is good practice from a portfolio construction standpoint.
So the lenders themselves do not do the loans for technical reasons, not because the credit is ‘bad’ or they are ‘scared’ of higher value loans. We believe that the higher value part of the market is a little underserved.
As a business, we felt that if we could attract a different type of capital to our business, we could write these loans as we would not be so constrained.
Once we had decided that the higher end of the market could handle another lender, the question then became, what type of client would this naturally attract? Higher value loans and higher value property, in general, attracts sophisticated, professional, mobile, wealthy and international borrowers and owners. This client segment has very little commonality; it is diverse. However, we noticed that one of the few things that bind this group of clients together is that they often have structures throughout their asset base. The complex nature of these clients is the feature. Complexity can often be a deterrent to getting a deal done, and for a good reason. It requires more time, more effort, more technical expertise.
At Tenn Capital, we have decades of experience working through many different areas of the financial services sector. We are very comfortable understanding complicated lending scenarios.
The final feature of how Tenn Capital will position itself is inextricably linked to complexity. Parts of the market often underserve international clients because they draw in a degree of complexity, requiring more in-depth technical expertise. Making a loan today is far more than a vanilla reading of the credit. An international borrower’s asset base that can span countries, time zones and structures requires the lender to spend the time really understanding the entire asset base.
We believe there is a gap in the market for a lender that can operate in this niche, and we will look to fill that gap over the coming months and years.