High profile fund to reach capacity in 2 years

High profile fund to reach capacity in 2 years


Launched only two years ago and with investment now fast approaching the £60-70 million mark, one of the bridging market’s most high profile funds, the Montello Income Fund, is in a stronger position than ever. Remaining resistant to the property market downturn, with a stated focus on prime London locations, the Fund is continually hitting its investment targets and, to guarantee its returns, is set to close to new investors within the next two years. 

The lender utilising the Fund, Montello Bridging Finance - established four years ago- has just secured additional funding from its financial backers and is now planning to grow its lending portfolio and become one of the most high profile bridging lenders in the market today. With this in mind, B&C spoke to Christian Faes, Managing Director of Montello Bridging Finance, to ask him a little more about the Fund on its two year anniversary…

How much has the Fund grown in the past two years?

The Fund has grown significantly over the course of the last two years. As IFAs and wealth managers get comfortable with the asset class and the Montello story, we have seen continued momentum with new investors coming on board pretty much every day. The exact figures, however, are not displayed publicly.

Why do you think the Fund has been resistant to the dwindling property market?

The Fund has always had a stated focus on the London market, and in particular residential property. Therefore the sophisticated investors that have invested in the Fund are well aware of the situation within the London property market. The London property market is far more liquid than many other parts of the country, and this presents a lower risk profile from a lender's perspective. 

Have there been any notable outside influences in the past two years affecting Montello generally?

We have been very much focused on just doing our own thing. Obviously in the last two years there have been a huge number of new entrants to the bridging finance market. We started in this market almost four years ago, so we have a proven track record, and are far more established than new players trying to get in on the action now. Also, having started four years ago we were fortunate to have not been lending leading up to the credit crisis, so we don't have a bad legacy loan book troubling us. 

What has prompted Montello’s financial backers to provide additional funding now?

I think we are seeing increased investment now primarily due to our track record. Over the course of the last three to four years we have managed a very conservative loan portfolio and implemented what we think are market leading practices. Investors are seeing this, and are obviously very comfortable with the risk adjusted return that we are providing to investors. 

What is the average investment value from individuals?

In our Montello Income Fund we have a minimum investment amount of £25,000 and a maximum investment per investor of £2 million. Having said this, I think at the moment the average investment size is about £100,000.

What other ‘alternative capital sources’ does Montello Bridging Finance utilise?

We have three funding sources, our Montello Income Fund, a bank funding line, and a family office. This provides us with ultimate flexibility with regards to how we can do deals.

What effect do you foresee the increased funding having upon Montello’s current security portfolio?

We do not intend on changing anything really - other than increasing the size of the loan portfolio. We will continue to focus on the London market, both residential and commercial, and look to continue to build quality working relationships with the broker community and borrowers. 

Are you planning on taking on more staff to cope with the increased amount of business?

Montello have hired a couple of people in the last month alone, and we will continue to grow at an organic pace. We don't have ambitions to have hundreds of people working at Montello. Our focus is on quality staff and getting the best out of them. We are far more focused on revenue per head than having more staff than we need. We have also spent a lot of time and money on building our internal systems (including computer systems etc) so we have built a very sound platform for future growth. 

In another two years, where do you see Montello and the Fund?

In relation to the Montello Income Fund, we imagine that the Fund will certainly be closed to new investors within the next two years. We are very careful to ensure that we build a sound lending portfolio, rather than one that is big for the sake of being big. 

The Montello Income Fund is structured so that the investor’s and Montello's interests are firmly aligned. There are no 'management fees' per se and we are only paid for performance, so we are incentivised to ensure that the Fund runs a conservative lending portfolio. Critical to this is making sure that the Fund does not get too big for itself. We have said that we would look at closing this particular Fund when it reaches the £60-70 million mark, which we are already approaching. 

We have read of some other funds in the market trying to raise huge amounts of money. However, it is very obvious that to ensure that such huge sums of money are utilised, you need to loosen your lending criteria and starting lending in all sorts of geographical areas and against all sorts of properties. With the conservative criteria of the Montello Income Fund its focus will always be on a more conservative lending portfolio.




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