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Fiduciam provided a loan to TVR allowing it to develop a new sports car and to start production in Wales, a project representing £30 million in capex
Fiduciam provided a loan to TVR allowing it to develop a new sports car and to start production in Wales, a project representing £30 million in capex
2020 has been a challenging year for so many. Whilst we look forward to 2021 filled with the promise of vaccines, treatments and recovery, we would like to take a moment to look back at 2020. The pandemic brought us together and showed the best in humanity. However, it also claimed many victims and caused enormous destruction. We did our bit to fight the crisis by standing by our SMEs throughout the entire pandemic and granting interest payment holidays and new loans. Whilst a number of lenders shut their doors, our employees did an extraordinary job to maintain an efficient lending operation and our institutional investors showed their strong commitment and humane engagement by continuing to advance funds. Our company continued to grow in 2020 both in terms of number of employees and loan book. We were honoured to become accredited by the British Business Bank as a lender in the UK government’s Coronavirus Business Interruption Loan Scheme. In our tradition of making festive fun, our Jane Bond captures some of the zeitgeist in our end-of-2020 holiday film.
Fiduciam, the institutionally funded short-term lender to SMEs and entrepreneurs, has just completed a £1.18million loan to finance a popular hotel in Cornwall. The loan which falls under the Coronavirus Business Interruption Loan Scheme (CBILS), will enable the hotel to continue operating and investing until the end of 2022.
2020 has been a year of contrasts at Hustyns Hotel and Spa in Wadebridge. After closing for three months during the lockdown, it reopened in July to experience its highest demand for rooms in recent years, only to be affected once more by this second national lockdown.
Fiduciam’s loan provides Hustyns Hotel and Spa with secure commercial funding for 24 months. Financing costs have been reduced thanks to CBILS, and the absence of early repayment charges gives the borrower added flexibility.
Ravi Gupta of Hustyns Hotel and Spa, comments, “Covid-19 has posed unique challenges to the hospitality industry – it’s been a real year of volatility. 2020 was expected to be a significant year as…
Fiduciam, the institutionally funded short-term lender, has just completed a Coronavirus Business Interruption Loan Scheme (CBILS) loan for £840,000. The loan was to a children’s nursery in Leytonstone, in North East London, called Harvey House.
The CBILS was designed to support the continued provision of finance to smaller UK businesses (SMEs) that have been impacted by the COVID-19 pandemic. The loans are delivered through lenders accredited by the British Business Bank (BBB).
CBILS has been playing an important role in supporting local business and communities throughout the Covid-19 crisis, as the case of Harvey House demonstrates well. Navneet Bansal, who has been a child carer for many years, took the initiative to open up her own children’s nursery, addressing a shortage of childcare in Leytonstone. It was a proud moment when Harvey House opened in December 2019, but only four months later it was forced to close because of Covid-19.
This hit the owners hard as they had to make debt service payments…
Fiduciam is used to dealing with the unexpected, so while Covid-19 has been a particularly unwelcome shock – both for people’s health and for the economy– it is something we have tried to take in our stride as far as possible.
Successful short-term lending is all about being flexible and adapting to circumstances as you find them, so our team has been well placed to react to the challenging situation presented by the coronavirus.
Fiduciam was quick to see the potential of the UK Government’s Coronavirus Business Interruption Loan Scheme (CBILS). The scheme is designed precisely to help businesses whose plans and finances have been hit by the coronavirus outbreak, and this seemed to us to be an excellent match for the flexible short-term finance options Fiduciam offers. The construction sector has been particularly hard hit, with figures from the Office for National Statistics showing that output fell by around two-fifths at the height of lockdown. The restrictions put in place to prevent the further spread of Covid-19 have…
The phrase ‘know your customer’ (KYC) is bandied about across many industries, but in the financial world it is mostly used in terms of identity verification and money laundering. However, knowing your customer is important for other reasons.
From a lenders’ point of view it is much easier to make decisions if we can really get to know our customers, understand their needs and work together for our mutual benefit. However, with many of life’s necessities available at the click of a button it appears that relationships between providers and their clients are becoming a rarer and rarer. At Fiduciam we believe there is little substitute to knowing our borrowers well and understanding their businesses. Our relationships with our clients and their agents are what make us stand out from the crowd and are a major factor in the amount of repeat business we enjoy. Fostering long term relationships is therefore at the heart of our business, which is ultimately about helping our clients grow theirs.
Over the last few…
It goes without saying that the Covid-19 pandemic has caused significant upheaval in the lending markets, with many lenders impacted in terms of their ability to lend, particularly bridging lenders, many of which pulled out of the market for a period of time, but in the medium term the bridging market is likely to do well due to Covid-19.
In the immediate term, we have seen disruption due to some lenders being unable to lend or their funding appetites changing due to the uncertain risks during this time.
During the lockdown, new valuations have been difficult to obtain and solicitors’ response times have slowed, while some small solicitor firms appear to have shut down, all creating issues for lenders. So funding right now is difficult and likely to be for the immediate future whilst the country gets moving again.
In the economy in general over the short term, it appears we are looking at a contraction which has not been seen in the…
Fiduciam Ireland has started 2020 with a substantial increase in new business, both north and south of the border, and is bullish about the prospects for rest of the year.
It aims to lend €50 million in Ireland this year, an increase on its original projection, and will also be opening a Belfast office. The company has already hired a new Irish case manager to help with the increase in enquiries.
Overall, the Irish property market has been improving with property price rises seen in the main centres. This is now spreading to commuter towns and some of the key county towns throughout Ireland. Northern Ireland, which is in a unique economic and political situation, should benefit significantly from Brexit and is likely to continue to perform well over the next couple of years.
Although the main banks in Ireland are still negotiating debt settlements with borrowers, Fiduciam has been proactive in providing exit solutions for many of the thousands of borrowers left in…
I recently found myself staying in a provincial budget hotel which, given the number of bugs flying around, was an experience I prefer not to repeat. I have encountered many cheap (and nasty) hotels on my travels and, especially as I hate spending money on accommodation, it upsets me that I continue to encounter them. The rise of Airbnb and other internet-based operators, that are offering rooms in private houses, means that lower starred establishments such as these are facing a new risk. Often private accommodation is superior and, as a result, some hotels are closing down and being converted to residential properties.
According to PwC research, hotel revenue per available room (RevPAR) is expected to rise slightly in 2020, but it is likely that much of the increase will come from hotels with better standards of accommodation. “Flying bug” hotels are unlikely to see an increase in revenues and will continue to lose market share to higher quality hotels and the likes of Airbnb.
One way…
Here at Fiduciam, we lend on care home assets when the underlying business model is strong, where experienced management is in place, but often due to special situations high street banks have vacated the playing field. Often these SMEs find it difficult to finance their expansion or are abandoned in times of short-term operational or financial difficulties, even though the issues faced by the business are generally resolvable in the medium-term. Fiduciam will take the time to analyse the business plan to determine how an expansion can best be financed. Equally Fiduciam will take the time to understand any underlying issues and endeavour to provide the business the short-term liquidity required to bridge their way back to sustained growth. Put simply, through our short-term finance, experienced entrepreneurs are able to grow and protect the equity which they often have built up over many years.
For example, Fiduciam was approached to refinance a loan a family-owned care home group had with a high street lender which was seeking to foreclose the loan despite the business still being…
As many entrepreneurs and SMEs discover to their despair, it has become difficult to count on the traditional banks when they need a loan for a new project or to expand their business. Traditional banks across Europe continue to reduce their commercial loan books as a result of the Basel III rules. A check-the-box culture, a sharp reduction in number of relationship managers and lengthy and unwieldly loan application processes make it increasingly difficult for many entrepreneurs and SMEs to rely on traditional bank finance. This void is being filled by a number of alternative lenders, such as Fiduciam. 2019 has been a good year for Fiduciam. We continued our rapid expansion by hiring 25 additional staff members. Our loan book surpassed €260 million in size and monthly production has been increasing rapidly through the year. October was a record month with over €51.7 million of new loans provided to entrepreneurs and their enterprises. In 2019 we also successfully expanded into Germany by opening an office in Frankfurt and we closed our first Scottish loan. We are looking forward to an even…
The world of finance and corporate culture are not always the best partners, as I have been able to witness extensively during my city career. There is the culture of greed, but greed is a biological imperative and not really culture. During my days at Merrill Lynch the board wanted to define a clear culture and launched the “five principles”, I still remember them by heart: client focus, respect for the individual, teamwork, responsible citizenship and integrity. But as the synthetic CDO debacle demonstrated during the financial crisis, these principles did not mean a lot to a number of Merrill Lynch employees and managers. Had they done, Merrill Lynch would still be around as a successful independent firm.
For a corporate culture to be successful, it cannot just be a declaration, it needs to be embraced by all employees and be part of the DNA of a company. It pulls employees together behind a mission, brings meaning to their work, gives them a sense of belonging, allows them to take pride in their jobs and motivates…
This article first appeared in: Mortgage Strategy
There has been much focus on the UK property market and whether house prices are rising or falling and whether this may or may not be due to Brexit. What we hear less about is what is happening with property prices with our closest neighbour The Republic of Ireland.
Ireland is most often quoted these days purely in relation to the potential backstop. What few papers report on is the current housing crisis in Ireland. Just a few years ago Ireland had one of the world’s highest rates of home ownership, but this ownership has dropped and both property prices and rents have risen dramatically. In fact, in May of this year, research by Deutsche Bank declared Dublin in the ‘Top 10 most expensive places to rent in the world’.
The shortage of affordable homes is a huge issue, with Ireland’s Department of Housing, Planning and Local Government in August announcing €84m in funding for 25 local authorities providing 1,770 affordable homes nationally. As a long-term solution, this is…
This article first appeared in: Mortgage Introducer
The opportunities within our industry are myriad, the trick is to attract the right people and then to make sure they are nurtured and given the chance to achieve their own goals, whilst also achieving your company goals.
Henry Ford, Founder of the Ford Motor Company, said “The only thing worse than training your employees and having them leave is not training them and having them stay”.
At Fiduciam we want our employees to stay for all the right reasons.
When recruiting, whether it’s a graduate, an intern, or someone with years of experience, the most important thing is to ensure the people you employ have the right attitude and fit your business.
With the right attitude you have the foundations for someone to build a career, rather than just turn up for work.
For career progression to be valid you need to provide explicit support to allow your staff to…
This article first appeared in: Mortgage Introducer
Whilst the P2P model gained traction rapidly following the financial crisis, it exhibits a number of shortcomings.
Firstly, retail clients and investors are often simply driven by yield, not evaluating the risks sufficiently.
In some cases ‘mom and pop’ type investors are not sophisticated enough to analyse the risks, looking only at the headline rate of interest they believe they will receive.
Several P2P platforms also do not provide sufficient information to their investors for them to make a proper assessment of each individual loan, even should the investor be qualified enough to do so.
This information asymmetry between P2P platform and investor is easy to understand from a GDPR perspective, but it does make the investor very dependent on the assessment that has been made by the platform.
A key concern is that many P2P platforms position themselves as an intermediary, but then, unlike any other type of lender, they do…
This article first appeared in: Mortgage Introducer
Many developers who need additional finance to help fund new development projects have substantial equity tied up in Spanish holiday homes, but cannot take advantage of it as it is nearly impossible to get leverage against such assets from Spanish banks.
Very often the developer needs the money for a specific project in the UK for no more than three years, but the amount they can borrow or raise from property in the UK is insufficient to finance the entire project. While developers could raise mezzanine debt or preferred equity, the cost of such debt is often prohibitively expensive.
Borrowing against Spanish holiday homes
However, many UK developers own Spanish holiday homes, frequently at the top end of the market. As Spanish real estate prices have recovered, a lot of equity can be tied up in such properties. Spanish banks find it difficult to lend against them for two reasons: first, they do not have access to the credit profile of…
This article first appeared in: Bridging & Commercial
Many bridging lenders are financed by a funding line provided by a bank or specialist debt fund.
Typically, these funding line providers will finance between 70–90% of the loan, with the remainder being financed by the equity of the bridging lender or through a junior funder.
While most bridging lenders use such funding lines, some are financed on a different basis. An alternative funding route is the P2P model, very popular a few years ago, but maybe less so today. The greatest risk with this is regarding investors’ money, rather than for the lender, which has increased FCA scrutinisation and the recent confirmation of new rules for P2P platforms.
Another alternative funding model is direct institutional funding, such as pension funds and institutional investors taking a direct stake in the loan book, but as there is no fixed template for this model, it takes longer to set up. Finally, there is the route of securitisation, but for such structures to be efficient,…
This article first appeared in: Bridging & Commercial
‘Fiduciam’ is Latin for “mortgagee” and the accusative singular of fiducia, which has as its root fido, which means “I trust/I rely upon”.
Fiducia cum creditore (which should not be confused with fiducia cum amico) was one of the earliest types of Roman mortgage, in essence the property would have been transferred to by the borrower to the lender on trust as security in order to demonstrate good faith (bona fides). Today we might use the term bona fide to mean “genuine”, however a more technical translation might be “reliable/reliability”.
The fiducia cum creditore created a system of mutual trust between borrower and lender because:
There appears to be a growing trend of borrowers looking to refinance a development before it is completed.
This could be due to multiple reasons – the current facility is expiring and the lender does not want to carry on; there have been cost overruns which the lender is unwilling or unable to fund, or because the borrower is looking for a discounted interest rate.
Developments can be challenging even under the best of circumstances, and a ground up development carries a different set of risks to refurbishment or conversion works, while new build extensions are slightly different again. Even the best planned development undertaken by the most experienced of developers can experience issues.
On refurbishments or conversions, there can be issues with the building, including underpinning requirements, asbestos, or structural issues with the property.
On ground up developments, there is ‘in-ground’ risk…
This article first appeared in: Mortgage Introducer
Metro Bank’s share price dropped to a record low earlier this month, down 75 per cent compared to January, a consequence of an error in risk weighting its commercial buy-to-let loans which came to light earlier this year.
As an alternative lender we were in a good position to observe some interesting developments in the commercial buy-to-let market over the past three years.
For example, in 2015 the majority of the bridge loans Fiduciam provided were related to buy-to-let. But progressively during 2016 and 2017 we lost this business as the challenger banks, including Metro Bank, became more aggressive in this segment, offering substantially lower interest rates.
This was incomprehensible to us as the international banking regulation framework, Basel III, requires a substantially higher risk weighting for commercial buy-to-let loans than for residential mortgages.
Basel III increased these risk weightings following the financial crisis to ensure that banks have sufficiently strong capital buffers when they have to write…
This article first appeared in: Mortgage Solutions
You might be forgiven for thinking that the opportunities in Europe will be under threat given our situation with the UK’s exit from the EU.
But, as a business that has been working in Europe for the past two years, we know that this is not the case.
Lending in Europe is not always easy, and in some countries not really possible, but we have made it our business to find ways to lend whenever, and wherever, we can. In some countries, other than local banks, there are very few lenders able to help investors and developers looking to obtain leverage over real estate in continental Europe. In fact, there are some countries where we are possibly the only other option.
When lending in a new country, the first step is to work out if it is indeed possible for a UK lender to lend, and if it is, then it’s a case of working out how. There are many nuances and almost every…
This article first appeared in: Bridging & Commercial
Based on observations and conversations over the past year, there appears to have been an increase in the search for international funds coming through London brokers.
A growing number of London brokers it seems, are being asked to access money by borrowers keen to do one of three things: either purchase an international property, carry out work on a property based overseas or, increasingly, release money from a property based in continental Europe in order to spend on property or business in the UK. In each of these cases there is another property that is being leveraged on a short-term basis in order to satisfy a development or business need.
There could be a number of reasons for this uplift, but it increasingly seems to be the case that if you have an international property and can’t find funds abroad then you look to London as an international finance centre. For flexible, short-term funding, London is still the place to come, even despite Brexit.
…This article first appeared in: Mortage Introducer
In part one, we discussed why it is important to know your lender. Now, we explain why this is even more relevant today and what can be done to reduce lender risk.
In our opinion, 2019 will be a challenging year for the bridging industry — for three reasons:
Widening credit spreads:
We have benefited from a very benign credit environment for the last few years and this will inevitably change. This may dry up the funding sources for some lenders.
Falling property prices:
We have not really had a proper real estate correction in the UK since the early 90s. We may be witnessing one in London right now.
Brexit:
If there is a hard Brexit, we believe the UK economy could…
Last year, we suddenly received an increase in loan applications from developers in the midst of projects who wanted a new loan.
Such applications make us wary as typically a borrower looking for a new loan in the midst of a project means something has gone wrong. We soon discovered the reason was that the borrowers could no longer make further drawdowns under their existing facilities as their lenders had funding issues.
The press has widely reported the fate of Amicus, but we have also seen other lenders which seem to have funding issues. As everybody may remember from the RBS small business loans controversy, a lender with problems can destroy a lot of businesses.
There are principally three types of lenders that can threaten a borrower: those that lose their funding, and those that are either not sustainable or not ethical.
Lenders who lose their funding
Some…
This article first appeared in: Bridging & Commercial
In June 2018, Fiduciam granted a €1.3 million, three-year commercial loan to Hatton Farm in the Republic of Ireland. Hatton Farm, which operates under Hatton Produce Ltd, is one of Ireland’s leading potato producers and is renowned for the high quality of its potatoes. As Hatton Farm grew and diversified over the years, it also became an important Christmas tree grower, in fact it has 150,000 of them. Like many other Irish farms, Hatton Farm was really let down badly by the traditional banks in the aftermath of the financial crisis. Marina Hatton commented: “Fiduciam believed in us when the big banks were simply there anymore. This farm has been in our family for three generations and it’s thanks to the loan that we got from Fiduciam that we can grow our business and secure our children’s future.” As a thank you for the loan, Hatton Farm offered Fiduciam one of its home-grown Christmas trees for their office. As a bit of fun, Fiduciam sent two of its BDMs to chop down the tree and carry it home, and filmed the whole lot.
…A year of many highs and lows, perhaps echoed in England’s journey in the World Cup, 2018 gave us much to deal with, but amazingly we have emerged into 2019 relatively unscathed.
Unemployment remains low, real wages are outpacing inflation for the first time in years, the economy is growing (slightly) and, despite being constantly threatened with rising interest rates, we only faced one quarter per cent increase in twelve months.
Storms battered the UK in January and snow covered much of the country in February and March. The inclement weather always has an impact and many were counting the cost once things started to thaw. Retailers were hit because many people just stayed at home, builders were unable to carry on building and many saw their insurance premiums rise following what was dubbed ‘The beast from the east’.
However, it wasn’t long before the UK was basking in the hottest temperatures the country has seen since records began. The heat was also rising…
This article first appeared in: Mortage Introducer
Following the take-over and recapitalization of TVR by a group of successful British entrepreneurs, the development of a new high-performance car was commenced in close cooperation with Gordon Murray Design. Fiduciam provided the cornerstone of the second capitalization round, closely working together with the Welsh government and equity investors, in order to finance a new production facility in South Wales, a project representing £30 million of capital expenditure and creating 150 direct jobs and many more in the supply chain. This transaction demonstrates Fiduciam’s ability to successfully complete ambitious transactions. The transaction required Fiduciam to work together with the Welsh Government and a company which provided third-party security for the transaction. The challenge was to find a financing solution that met the needs of all stakeholders. The overall security package consisted of real estate, farmland, manufacturing assets, intellectual property, cars and parts. The transaction was brought to Fiduciam by a corporate finance boutique in the City which simultaneously worked on an equity raising for TVR.
+44 203 290 1933 (United Kingdom)
+353 85 257 6488 (Ireland)
+31 (35) 303 1360 (Netherlands)
+44 208 075 9370 (Spain)
+49 173 194 0983 (Germany)