The FCA has finally recognised the evolution of bridging finance today, with the official launch of the first regulated bridging fund.
B&C broke the news three weeks ago about the TB Walker Crips Income from Short Term Lending Fund, which officially launches today.
By authorising and regulating such a fund, the FCA must be recognising the evolution of bridging not only from an investment point of view of a prudent spread of risk but how bridging finance has evolved over the years and is now recognised for being a viable financial solution and investment.
The fact that there was a chapter dedicated to bridging finance in the Mortgage Market Review (MMR) is further testament that the product is making innovative solutions.
It is the first regulated bridging finance investment fund to be launched in the UK and it is targeting an annual income of 8.5 per cent gross, or 0.7 per cent per month.
The fund will source its income by providing credit to three bridging lenders – Bridgebank Capital, Mayfair Bridging and Century Capital.
Having a minimum of three lenders helps the TB Walker Crips Income from Short Term Lending Fund satisfy the FCA’s requirement of a prudent spread of risk.
Russell Martin of Finance 4 Business commented: “the launch of the regulated fund is fantastic news for the industry as a whole. The fact that the FCA has approved the £30 million fund reinforces the integrity of the short term lending industry, and in particular the three companies involved in the first tranche.
“The forecast growth of the fund over a four-year period is bullish to say the least but this does suggest that this sector of finance is here to stay, at least for the medium term. With liquidity within term lending continuing to be strained and the FCA approving such a fund clearly demonstrates the merits of short term finance if utilised correctly. The shape of short term finance has evolved greatly over the last 12 months with less deals being truly time sensitive, but more demand for a ‘financial solution’ as more and more borrowers are returning to market.”
Kit Thompson, Head of Bridging & Commercial at Brightstar Financial, said: “I think this is excellent news, as it represents another serious injection of liquid capital in to the sector. Investors are hungry for attractive returns on their cash investments and the UK property and lending market continues to offer extremely attractive rates of return, especially when compared to bank savings interest rates
“Likewise, property investors want accessible funding for their property projects. If managed correctly, it is a ‘win-win’ scenario, although investors must be cautious before committing funds and the fact this is the UK’s first regulated-authorised fund, combined with the risk being spread between three bridging lenders, borrowers should have additional peace of mind.”
The fund aims to have funding lines of £30 million for the three specialist lender partners selected for the launch in the first year. No one lender can have more than 50 per cent of the funding available at one time, as a prudent spread of risk.
It plans to grow to £300 million over the next three to four years, with a benchmark end figure in sight of £500 million.
PRODUCT CRITERIA
- FCA authorised and regulated;
- UK-only property – excluding Northern Ireland;
- Loan applications will be approved within 48 hours
- Only 1st charge lending;
- Funding primarily available for residential;
- Commercial funding also available in certain circumstances;
- LTV up to 70 per cent; and
- Average LTV is predicted to be under 60 per cent.
INVESTORS
- 8.4 per cent (gross) returns per annum;
- Monthly coupon of 0.7 per cent (gross); and
- Minimum investment £20,000.
James Allen, Investment Manager for TB Walker Crips Income from Short Term Lending, said: “We are looking forward to the official launch today, 1st August, having seen a very positive appetite from sophisticated investors and IFA’s.
“There is real excitement from the marketplace for a truly innovative product and we are pleased that all the hard work over the last two years will soon come to fruition.”
Leave a comment