CapitalRise live loanbook up 125pc
CapitalRise has seen its live loanbook grow by 125 per cent to £138m year-on-year from the end of March 2022 to the same point in 2023.
The firm has reported a strong first quarter of the year, which chief executive Uma Rajah (pictured) attributes to a combination of investing heavily in its origination team, and a favourable marketplace in which banks are reticent to lend.
Rajah said the firm has now done £280m of lending in total, of which £117m was in just the last 12 months.
In the financial year ending 31 July 2022, CapitalRise recorded an 89 per cent year-on-year growth in loans originated and paid out more than £46m to investors in capital and returns.
The lender’s gross profit margin for the period was more than 70 per cent, with revenue tripling over the past three years.
It has committed to “an ambitious revenue target” for the 2023 financial year, although the firm chose not to include an income statement in the latest results filing.
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“Effectively, our revenue comes from our live loanbook”, finance director Stuart Peel told Peer2Peer Finance News. “We accrue it over the life of the loan. As that gets bigger, we’re just accruing revenue off that on a monthly basis. So that’s the real engine of the revenue growth story.”
As a result of considerable investment in the originations team, CapitalRise has managed to grow both the volume of loans and their values.
In January, the firm redeemed its largest loan to date at £17.5m, taking the total amount returned to investors in capital and returns to more than £130m at an average return of 8.2 per cent, with no investor losses or defaults.
“We’ve actively been trying to increase the size of our average loan,” Rajah said. “When we first started the business, we were doing average loan sizes of £1m to £3m. And in the last two years, more of our loans are in £5m to £10m type bucket.
“Some loans have been £10m or £15m plus. So, there’s definitely been some quite large loans, that we now have the capability to do, that we didn’t when we first launched, that have meant we’ve been able to really shift our average loan size.”
Rajah said the firm sees the coming 12-18 months as a chance to gain more market share. CapitalRise has already expanded its financing beyond the prime London region to prime Home Counties developments.
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It has also invested considerably in improving the platform for lenders, streamlining processes and automating manual processes to making it more efficient and quicker.
“At times like this, alternative lenders like us can really step in and grow our brand and grow our market share because a lot of the traditional leaders tend to be very conservative and rein back,” Rajah added.
“Prime central London has been in decline since the end of 2014. And prices are around 15 to 20 per cent lower than they were at the peak. We are at an inflection point now, where Savills and Knight Frank are forecasting no more than maybe a couple of per cent for this year, and then moving into the positive growth.
“If you compare that to the London market and the overall UK market, they’re in a very different place. So, we’re at a point in our cycle where it’s a great time for developers to start projects.”
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