Assetz Capital pivots to wholly institutional funding model

  • 15/12/2022
  • 0
Assetz Capital pivots to wholly institutional funding model
Assetz Capital will be closing its retail investment loan book over the next five years to transition to institutional funding.

The specialist property finance and investment platform said this was due to the rising base rate resulting in higher bank savings rates.  

Assetz Capital said higher interest rates which appeared to be “semi-permanent” had negatively impacted its retail investment proposition. Following rate increases in Q3 this year, the firm said it saw “modest net outflows” from its Access Accounts. After discussions with investors, it found that there was not enough demand from retail investors for its services. 

Its Access Accounts will remain gated, meaning it will be closed to redemptions and new investments. Once committed loans are fully funded, cash will be withdrawn from this facility on a pro-rata basis to people’s holdings. 


Move to institutional funding 

Assetz Capital said institutional capital had accounted for 80 per cent of all its lending since 2020 and going forward, this would be its primary source of funding. 

The closure of its retail platform will not impact on any current lending and this will continue to be fulfilled as expected. Assetz Capital said new lending would also not be affected, as that would be funded by the lender’s existing institutional capital. 

The firm said its retail platform had contributed to the funding of over £1.5bn towards the development of new housing so far. 

Now, Assetz Capital will rely on institutional funding to continue with its aim to reach its £2bn lending milestone. 

Over the longer term, it hopes to fund a quarter of new homes built by SMEs in the UK. To achieve this, it has agreed new funding lines this year and more agreements are expected next year. 

Stuart Law, CEO of Assetz Capital, said the lender was proud of what it had achieved with its retail investors, which provided returns when interests rates were near zero per cent and supported its lending. 

Law added: “Given market conditions, retail investors now have more choice over bank savings products than at any time in the last decade and this has reduced their investment appetite as a result.  

“We have therefore taken the decision to make permanent the temporary pausing of new lending through retail investor capital. We understand this might be frustrating for some retail investors and we will do all we can to support them, provide timely and clear information, and facilitate their withdrawals as quickly as possible.” 

He said: “We would like to thank all of our retail investors for support over the last 10 years and have been pleased to be able to put their needs for investment returns first for all of this time, always giving them as much volume of investment as we could originate for them for as long as they wanted that return.  

“We will diligently safeguard investors’ capital and ongoing interest payments to ensure this part of their portfolio continues to deliver good returns for them as the loan book runs off.”   

Andrew Charnley, managing director at Assetz Capital, said retail investment was a “crucial part” of the business, but Assetz Capital had also “futureproofed” its business model by having access to multiple funding lines. 

He added: “In reality, we already funded around 80 per cent of all loans through institutional capital.” 

Charnley said: “Our focus now is on taking the institutionally funded part of the business forwards to become 100 per cent of all lending, continuing to build on our reputation as a market leading institutionally funded lending business.  

“Our ambitions to increase our lending to SMEs, housebuilders and other key sectors have not changed at all which means our focus next year and beyond will be continuing to work with institutional partners to drive loan book growth, while supporting retail investors still utilising the platform as we manage the retail investment loan book run off.”   

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