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Two industry veterans have announced their return to the broker channel with a new private lender, Arc Money, which will capitalise on client needs in the current higher interest rate environment.
Graham Mendelowitz (pictured above left) and Mervyn Kark (pictured above right), who founded and ran MKM Capital until its sale in 2002, have co-founded Arc Money, which will focus on lending to company and trust clients.
Distributing through brokers, Mendelowitz said the private lender had begun discussions with ACL holders, as well as aggregators with a view to taking up a position on broker lending panels.
“We looked at the lending landscape and the area that we find of interest to us, which is obviously a fast-growing area of the market, is the private space,” Mendelowitz told Australian Broker.
“Obviously interest rates are elevated, and we think that’s creating a need among customers to look at alternative solutions for what they might be doing.”
Arc Money has inked deals on two funding facilities, which the founders say combine to provide it with a broad appetite and “an extensive runway” of “hundreds of millions” of dollars in lending.
The facilities are an institutional warehouse facility with an Australian institution, which will lend within agreed lending criteria, and a major family office for more “outside the box” lending.
Mendelowitz said the arrangements differentiated it from peer-to-peer or contributory mortgage fund models, in providing agreed capacity to lend as well as certainty of credit and settlement.
“We’ve got that committed funding, whereas in other models, it can be subject to the appetite of individual high-net-worth investors, for example,” he said.
Arc Money is aiming to offer products with an edge over competitors in the private lending market.
For example, Arc Money has an appetite to lend up to $15 million, can go up to a 75% loan to value ratio, and is able to offer extended loan terms of between six and 36 months.
The lender can also lend to non-residents and non-citizens, subject to approval, and will also look at land, end-stage construction, and rural and resident property transactions.
Mendelowitz said Arc Money’s lending facilities would also take in the small end commercial property space, including office, retail and industrial. The firm will also be offering second mortgages.
“We want to understand the purpose of [the] loan, the exit strategy, and make sure the borrower can afford the loan by accountant confirmation, though quite a lot of the borrowers will pre-pay the interest. After that, we focus on the security,” he said.
The lender has arrangements in place with a property valuer that gives it a national presence, as well as a legal services firm specialising in private lending that can support loan settlement nationally.
Mendelowitz said the firm had digital capabilities and processes in place, including the ability to use digital identification via a mobile phone, and accept digital signatures on loan documents.
Mendelowitz will head up the funding side of Arc Money, based out of Sydney, while co-founder and fellow director Mervyn Kark, who is based in Melbourne, will be head of product.
The private lender has also appointed a director of operations, and is currently bringing on a business development team on the east coast, in Sydney, Melbourne and Brisbane.
Mendelowitz said Arc Money would seek to broaden its footprint to South Australia and Western Australia, and was also actively looking at loan portfolio purchasing as it grew.
“We bought up a number of loan portfolios in our previous travels, and we are interested in loan book purchases we think would allow us to get some scale into the business.”
Ultimately, Mendelowitz said the business aimed to provide alternative lending options in the current market, whether for personal reasons and life events, or business requirements.
“From our point of view, we’re bringing the experience we've had to the market; it's a new brand, but not new people. We're hopeful that some of those differentiators we have will allow brokers to warm to our offering,” he said.
