Bluestone Group, the financial services company that enjoyed explosive growth during the low-doc loans boom of the early 2000s, has flagged a return to the non-conforming loans market after banking giant Macquarie Group took a 17.5% stake in the business.
Bluestone, which was founded by leading entrepreneur Alistair Jeffery, stopped originating new loans when the GFC effectively shut down Australia’s securitisation market in 2008.
The company has since concentrated on financing and running mortgage and consumer credit loan books. It says it is set to post a net profit of $6.4 million this year, up from $6.1 million last year, on gross assets of $1.4 billion.
But chief executive Peter McGuinness has been actively looking for new investors to come on board and grow the business by acquiring more loan books and providing funding to property developers.
“We started a capital raising process earlier in the year and given Macquarie’s pedigree in capital markets and mortgage securitisation, we knocked on their door to see if they were interested.”
In addition to Macquarie, which will also take a board seat, Bluestone has refinanced $20 million worth of debt with Asian company Forum Partners, who will also take a 5% stake and a board seat.
Other investors in the company include Bank of Scotland, private equity firm Crescent Capital Partners, management and Jeffery himself, with 35%.
McGuinness says investors are becoming increasingly attracted to the Australian region, due to the relative health of the economy, the shortage of liquidity in the market and property sector opportunities.
“They have all compounded to make this region very interesting.”
In the case of Forum Partners, Bluestone will act as the firm’s Australian eyes and ears, finding, running and co-investing in transactions.
McGuinness says Bluestone remains keen to return to the mortgage market, and says this will occur some time over the next six to 12 months – depending on market conditions.
“I think there is no issue in terms of borrower demand, that’s still pretty strong,” McGuinness says.
“There are some early signs that investor appetite is creeping down the asset structure. It’s traditionally at the triple A and double A, but we are seeing interest at the lower-rated bonds.”
“To some extent I think us and other lenders are going to have to help the lenders along.”
However, McGuinness expects institutional investors buying bonds will be very choosy about the lenders they support.
“Having five, six, seven years experience is going to very important. I don’t think you could be a start-up in this area.”
Bluestone’s other focus is Europe. The company has an office in the English town of Cambridge and is in the business development phase, looking at opportunities to acquire or fund loan books.
“We’ve seen some fascinating opportunities out there. There is just a massive shortage of liquidity in Europe. We think Europe is going to kick.”
James was the editor and publisher of SmartCompany and LeadingCompany for five years. He is now the Australian Financial Review‘s companies & markets editor, and a former BRW editor.
