28/02/2017 - Consumer Finance“Wingate considering ASX listing for Now Finance”
The Australian, 28 February, 2017
Damon Kitney, Victorian Business Editor
The private Melbourne investment house Wingate is considering listing its consumer finance business on the Australian Securities Exchange as it looks to grow its loan book to $1 billion in size over the next five years.
Wingate is conducting a beauty parade for stockbroking firms ahead of making a final decision on proceeding with a listing in the second half of 2017, which is expected to raise up to $70 million for its balance sheet lending business known as Now Finance.
“The capital we would raise would be used to fund our ongoing growth. We are profitable so it is not about funding cash burn. We want to grow our balance sheet so it remains relevant to the size of our book,’’ Now Finance chief executive Richard Blumberg said.
“The opportunity is to take market share away from the banks. To provide an outstanding service with a competitively priced product. This is non-core for the banks and the customer service is not great, especially in the mid-market where we service, and often the product is not competitively priced.’’
Now provides a customer with an interest rate upfront — between 9 and 16 percent depending upon their credit rating.
“We let the customer see upfront what they get and then they can decide if they want to proceed with the loan,’’ Mr Blumberg said.
Wingate has become an investment house of choice for a string of high-net-worths, family offices and more recently institutions across its four arms of funds management, consumer finance, property lending and private equity. It now also has a presence in Sydney as well as Melbourne. Its point of difference is that the firm invests its balance sheet and its principals’ and shareholders’ capital in deals together. It is best known among rich-listers for its property lending business.
Now is one of a number of players in the local $60bn personal lending market which is being disrupted by a range of peer-to-peer lenders such as RateSetter, SocietyOne and MoneyPlace.
But Now is a balance-sheet lender as opposed to a peer-to-peer lender like Society One, which means it makes loans on its own balance sheet and bears the first loss on any bad debts.
SocietyOne also operates solely online whereas Now operates three different distribution channels, including a broker channel with 2400 accredited brokers
Now’s average loan to primarily middle-income Australians is between $20,000-$30,000, is both secured and unsecured and is used for multiple purposes including vehicle purchases, home improvements, household furnishings, debt consolidation and travel.
Now’s current loan book is expected to exceed $140m by June this year, underpinned by consistent 35 per cent quarter-on-quarter growth.
“Our view is that over the next three years we would like to get that to $600m. And then push through $1bn over five years,’’ Mr Blumberg said. “It is very doable and certainty what we are focused on’’
While the business originally attracted investment from Wingate’s high-net worth client base — which include the likes of Smorgon family scion David Smorgon and Square Peg co-founder Paul Bassat — it is increasingly attracting banks and institutional investors who are attracted by the quality of the underlying loan book.
Now has a funding platform which includes a bank warehouse, multiple investor note programs, as well as a separate institutional note program. “Our funding platform is quite diverse. For us it is a major point of difference in the market,’’ Mr Blumberg said.
“Right now we have four active note programs in market and are about to go with a fifth.’’