LFP184 – A Fintech Dominating Its Sector – Prime Real Estate Lending w/Uma Rajah CEO CapitalRise

I can think of very few UK Fintechs that dominate their sector as successfully as CapitalRise who have something of a monopoly of being the only independent prime real estate property finance provider. Not only that but to date they have an unbeatable 0% loss-rate on loans that have returned ~9%pa to investors. The Credit markets […]

I can think of very few UK Fintechs that dominate their sector as successfully as CapitalRise who have something of a monopoly of being the only independent prime real estate property finance provider. Not only that but to date they have an unbeatable 0% loss-rate on loans that have returned ~9%pa to investors. The Credit markets really reward detailed expertise – an obvious conclusion perhaps, and yet so many new Fintechs launch into a sector with relatively superficial expertise and just a desire to “innovate”.

In this episode we dive not just into the secretes of CapitalRise’s success but also generic lessons for Fintech and FS success as a whole.

CEO Uma Rajah shares what it was in her career that led to being able to deliver these results, including founding a Fintech which didn’t.

All of these topics perhaps point to the continuing maturation of the sector. FS is super-specialised and so is it much of a surprise that sectoral-specialists and older wiser folks who have scraped elbows along the way are dominating most UK Fintech sectors right now?

Topics discussed include:

holes in the space-time continuum
the art of making excuses
CEO-ing and mothering in parallel when WFH in Covid mode
property market ahead of others being back in the office as construction has continued regardless
young founders vs middle-aged founders
Uma’s career journey and key learnings along the way
starting a Fintech in 2007, which turned out to be one year ahead of the 2008 near-collapse of FS
key lessons learned from founding that Fintech
working at Wonga and the challenges they overcame
CEO-ing CapitalRise since 2015
defining the Prime Property sector and its characteristics – absolute and relative value criteria plus selected geographical areas
super-prime is easier to define as £10m+
CapitalRise lend from £1m-£10m with some loans up to £20m, average loan size around £6m
they do around 1 or 2 loans per month; to date have lent against assets worth £480m,
bridging loans, development loans, sales period loans
essential nature of specialist knowledge in this sector
Prime Estate bounces back up to 3x faster after market dips
during 2020 despite all the challenges and lack of travel the market has held up well
why London market is strong despite everything
micro-location knowledge
the value of developers on their credit committee – an interesting concept – haven’t come across credit analysis involving the sector and not just a bunch of bankers who think they know better…
deep memory cf MotoGP
repaid to investors ~£55m of development loans that were all Covid-impacted, despite delays changes of work processes etc
the key importance of operational management of the ongoing risk in complex sectors to head off problems before they occur
CapitalRise’s approach and how this had to change during the Covid period of higher risk for development projects
restructurings and backup plans
“active loan management”
last year CapitalRise screened >£5.5bn of loan inquiries :-O (up from ~£3.5bn last year)
repurposing of assets
Prime prices are ~20% below 2014 peak
CapitalRise have more than doubled in past 12mts
shoutouts for investor base from HNWI/sophisticated investors to institutions and borrowers
average rate of return has been a super-impressive 9& pa secured over a prime asset as security
diversity of capital sources from a crowdfunding platform to many types of institution

And much much more

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