Why Have You Launched a Lender Now?
There are 4 reasons we set up Tenn Capital. Firstly, we feel the economic conditions are favourable and will remain so for some time. Secondly, the amount of capital exiting low yield investments looking for a home is substantial. Next, we felt there was a genuine gap in the market for a short-term lender who wants to lend £1m plus, to high-net-worth clients. Finally, we believe we have a world class team. Our collective experience spans lending, risk, tax, investments, property, compliance, administration, structuring, broking and banking. Put these things together and we think Tenn Capital is a pretty compelling business.
What is Your Lending Philosophy?
Tenn’s philosophy is simple: we’re in the business of lending, and if we can lend, we will.
We don’t need clients to fit a certain box or have a specific profile to lend: we assess each deal on its merits. Our approach allows us to evaluate each transaction and every borrower on their individual distinctions.
That said, in every loan, we want to see either a great client or a great asset. We like to lend against prime real estate in the UK and the Channel Islands primarily, but we will also lend to borrowers with assets in prime European cities.
What Does Your Typical Client Look Like?
We work with clients from all over the world, and they have very different profiles and backgrounds.
Of course, there are a few common denominators. Our clients tend to be wealthy, globally mobile and quite sophisticated in terms of what they need and expect from us. Usually, they want to borrow a significant amount, and they own significant personal assets.
Our clients are used to working with professional advisors. Clients and their teams are often very astute about their options when structuring debt and borrowing efficiently.
Why was Guernsey Selected as a Base for Tenn?
Firstly, we’re based here because Guernsey is a great place to do business! Guernsey might be small in terms of size, but we are a globally recognised and trusted jurisdiction. Guernsey also has an excellent reputation from a compliance and regulatory perspective, which is essential to our clients and their advisors
Many of our clients have structures and advisors in the Channel Islands, which makes doing business easy, and of course, as a Crown Dependency, doing business with the UK is frictionless, too. We’re also especially well positioned to do cross-border business, which is a plus, given many of our clients have UK property but are not UK residents or they want to use offshore structures in the deal.
Lastly, Tenn has a great team based here in Guernsey. We’ve all had careers with international businesses and served international clients for many years before starting the business. We understand the needs of high-net-worth individuals and their advisors. We move fast, know what excellent service looks like, and we really care about adding value – it’s in our DNA.
What Kind of Lending Scenarios Do You Specialise in?
We specialise in a few different scenarios.
Firstly, we help our clients solve liquidity issues. We find it’s rarely discussed, but we know that many high-net-worth individuals encounter liquidity challenges. I think it’s important to underline that needing to solve liquidity challenges isn’t a question of the borrower being in financial trouble or that they’ve made poor money choices. Our clients often have substantial wealth, but they don’t have easy access to cash – wealth is invested in the stock market, businesses, real estate, and various other assets. When an unexpected expense or situation comes up, they often can’t get the cash together quickly enough to make the necessary payment and to remove the need to liquidate great assets, which may not make longer term financial sense, we help these clients solve liquidity problems through loans secured against their assets.
Secondly, we operate in a space I’d describe as opportunity enabling. We all know from a % return point of view, it makes very little sense for anyone to hold money at the bank. Yet, if our clients are short on cash, they have very few options to borrow capital easily, even if they are very wealthy and have fantastic assets. We’re happy to see the capital we lend deployed broadly. We’re often approached because a client wants to borrow money to invest (in stocks, property, businesses, etc.), buy assets, or pursue a high ROI opportunity that comes in a different form. As long as the numbers add up, we are comfortable when our clients borrow to pursue opportunities.
Lastly, we are very comfortable with complexity and lend even if a deal is complicated for many reasons. This might entail lending to an offshore company or a corporate structure, working with complicated properties, non-UK resident borrowers and so on.
What is the Average Property Value and Loan Size?
What we can lend will always depend on the borrower, the security and the particulars of the deal. We build every loan from scratch, which means there’s no definitive formula for what we’ll lend. We lend upwards of £1 million, and in theory, we don’t have a maximum cap on what we will advance.
That said, most of our loans will be in the £1-10 million range. The property value for loans of this amount will sit at about £2-20 million, again, depending on the components of the deal, the security and the borrower.
What Direction Do You Think the Bridging Finance Market is Going in?
There are a lot of lenders in the market, and more entrants are launching their businesses all the time. We founded Tenn on the premise that we could add value and serve a group of clients who weren’t being well-served elsewhere. Many of the other new players in the market are going head-to-head with already established and very strong businesses, which can be more of a challenge as there’s less to differentiate them from their competition.
Most of the established lenders serve the middle market and focus on building a volume loan book, rather than the higher value loans that Tenn does. There are great lenders doing this, and when borrowers have a relatively straightforward situation and want to borrow a few hundred thousand pounds, they will be spoilt for choice. On the face of it, lots of lenders is an excellent thing for borrowers: any time there is more competition in the market, there are better deals to be had. As more lenders have entered the market, we’ve seen the price of bridging finance drop quite steeply over the past decade or so, and again, on the face of it, that’s a good thing for borrowers. But I don’t think it is long term. Market saturation can make things tricky. When lenders are going head-to-head with numerous competitors, it gets harder to win business. Broad market price compression leads to loss leading rates that are funded below the cost of capital to buy the business. I would be surprised if that isn’t already starting to happen in some cases. There’s always a risk that lenders will take on deals they shouldn’t and this will ultimately lead to consolidation in the industry.
The winners in this market over the next few years will be those with at can deliver high levels of technical expertise on the credit, access to deep financial resources and a consistent origination funnel.
What’s Next for Tenn?
In the last five months, we’ve achieved so much, including securing a £300 million lending facility from Elliott Advisors (UK) Limited. The team and I are delighted to bring a totally new funding line into the market and work with a firm like Elliott that supports our vision and lending appetite.
As for what’s next, we will be scaling. We are hiring more people in Guernsey and a BD team in London. We’re set up to move quickly, and we’re keen to lend. I expect the next few months to be (very!) busy, and I couldn’t be more optimistic for the future of Tenn Capital.