New look General Finance to take on gaps in market

Filling a gap in the mortgage market will be the focus of non-bank lender General Finance following a buy-out by a group of investors, including Brent King.

Monday, January 8th 2018, 1:59PM 1 Comment

Former Dorchester Pacific boss King, who will run General Finance, says there is significant market demand for mortgages and they are seeking to meet that demand with competitive products.

“We plan to bring another lending party to the market, one that takes a sensible, balanced approach to good borrowers.

“That’s because we can offer the opportunity for people to place loans with us that they are struggling to place elsewhere – usually due to the banks’ numbers, not the borrowers.”

General Finance specialises in shorter term, situational loans as opposed to longer term bank style loans and the company is active in the bridging market, he says.

“We will be happy to get approaches from advisers, as well as direct approaches, about mortgages and will provide quick decisions on loan applications.

“As a smaller lender, part of the value we can give clients is in rapid, clear-cut, and direct answers.”

General Finance started out in 1999 as a second mortgage lender but has been offering a full range of home loan products since 2001.

Under the directorship of William Cairns and James Lockie, General Finance survived the global financial crisis.

It has been trading profitably in the years since, with total assets of $12.9 million and liabilities of $9.7 million as at September 30 2017, according to its most recent product disclosure statement.

Around 84% of its assets were loan receivables, of which $10.2 million were on first mortgages and $630,000 were on second mortgages.

However, the non-bank lender, which is funded by deposits from the public, has flown under the radar somewhat in recent years.

The change in ownership means that is set to change, with the new owners planning to further develop and build up General Finance.

That could include getting a credit rating, which would require liabilities of over $20 million, and, potentially, listing the company.

When it comes to funding development, King says they see an opportunity to attract investors by catering to the demand for shorter duration investments with competitive returns.

“Investors often cannot think through where they will be in seven years but they can understand where they will be in two years.

“Yet it is difficult for the average depositor to get fair rates on terms like 18 months to 3 years. General Finance specialises in this term of investment.”

While many investors have been using peer to peer lending in recent times, some are finding that the efforts and the returns don’t work, he says.

“Depositing with a finance company may appear to give a slightly lower return, but when investors factor in the risk /weighted return the deposit takers are very competitive.”

King is well known as the founder and manager of Dorchester Pacific, which he ran for 17 years until 2006.

While the finance company was successful under his stewardship, it ran into problems following his departure due to a failed investment in St Laurence.

He is now a director of Chow Group and Mykco, as well as the managing director of Investment Research Group Ltd, Equity Investment Advisers Ltd and King Capital & Investment Corp Ltd.

Besides King, the new owners of General Finance are Malaysia-based Rewi Bugo, investment banker Marvin Lee and the Business Bakery's Grant Baker and Stephen Sinclair.

They bought General Finance, from Cairns and Lockie, through Corporate Holdings Ltd on December 17 last year after the transaction gained approval from the Reserve Bank and the trust deed supervisor.

Cairns and Lockie will not continue to have a role in General Finance. There is now new management and five new directors.

Tags: General Finance Lending mortgages