Stephen Johnson, director at 9Y Capital

Do tough markets make strong lenders? Stephen Johnson discusses new venture 9Y Capital

Following the news last month that Stephen Johnson (pictured above, right) and his longtime business partner Karen Bennett (pictured above, left), were building a new non-bank lender, B&C caught up with Stephen to find out about the venture.

Stephen — who was one of the founding executives at Commercial First, Shawbrook, and a founding partner at LendWell, amassing over 20 years of property finance experience — established lender 9Y Capital in May 2023, offering bridging, refurbishment, and development loans for property investors and developers.

“I enjoy the energy of building something, having a vision and a passion, and hoping and working to try and deliver on that,” Stephen told B&C.

According to the new lender’s website, it “works with people, not numbers”, and can apply an element of commercial judgement when required.

“Karen and I share a passion to try and build great businesses and teams; we get a lot of pleasure from putting together great people and seeing what they can achieve,” Stephen shared.

9Y Capital has been able to establish a diverse range of funding lines, including institutional senior finance, private capital investment, and a forward flow facility.

“[We have] a good combination which gives us some optionality and diversity to the funding model,” he stated.

Stephen highlighted that finance providers must be able to deal with a market that has very similar looking funding lines and, while funding can be improved slightly, it won’t make a business an outlier. “You're not going to be able to outperform the market on the price you get for your lending”.

Stephen is keen to build on what he knows and part of this is through HMOs, which throughout his career, alongside Karen and with 9Y Capital, he has worked his fair share of.

“We've done a lot of HMO conversions, I built a portfolio of my own HMOs, so when we're looking at these deals, I have first-hand experience of the numbers involved and the realities of working with contractors on that.”

Despite 9Y Capital being a new player on the block, Stephen and Karen’s connections, experience, and collective reputation are likely to support the lender through an uncertain market. However, through Stephen’s eyes, a difficult economy can work in a new lender’s favour.

“In my experience, the slightly tougher markets can often be good for lending in because often you get a better-quality client that's active because it's tougher.

“And there are good opportunities in the market because a lot of the people that were probably active before and maybe didn't have quite as robust a model have probably found it too difficult to continue to operate.”

Stephen cited establishing Shawbrook in another time of stormy economic waters and market uncertainty, as a testament to this logic. He sees that coming off the back of a financial crisis — as were the circumstances amid the birth of Shawbrook — creates a great time for building a new business due to the impact on credit availability.

According to Stephen, when markets become too liquid, it can bring about a host of problems.

“I think a tougher market can sometimes be a better market to be lending in than the markets that get too liquid because, in my experience, you end up in an environment where you're ultimately having to lend more aggressively for finer margins,” he added, explaining that the competitive pressures can lead to poorer outcomes for lenders.

Despite having sizeable ambitions for the business, Stephen shared that 9Y Capital’s growth journey won’t necessarily involve rapid and aggressive growth; instead, he sees the road for the new company as steady and moving at its own pace.

“We have our own plans to build a reasonable sized business,” he noted.

“We're quite keen to invest and grow organically and not be under pressure to grow or originate unless we feel like the opportunities are there."


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