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 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 🙂

Share and enjoy!