A new alternative finance provider is targeting small to mid-tier property developers across the country, aiming to lend €50 million in its first year of business.
Sancus, a UK financing company owned by Aim-listed GLI Finance, is ramping up its Irish operation, and is looking to lend on commercial and residential developments across the Republic and Northern Ireland.
Michael Mooney is managing director of the Irish operation, joining the company from Barclays Ireland, where he was director in the corporate real estate finance department. He said that Sancus saw "a gap in the market" here, and eyed the opportunity to fund property development given a reduction in available bank debt for the sector.
Sancus will typically lend bridging and development loans in the region of €1 million-€10 million at a loan-to-value of about 70 per cent, and at interest rates of about 8 per cent.
While the business since its launch is “at expectations”, Mr Mooney added that one challenge for developers remains raising enough equity to close a deal.
Sancus funds itself through a number of sources. It has a credit line with UK private equity fund Honeycomb Investment Trust, but also operates as a peer-to-peer lender in the UK, seeking to match the financing requirements of businesses and entrepreneurs with funders seeking returns above the current low interest rates available elsewhere.
According to Mr Mooney, while Sancus won’t adopt the peer-to-peer model initially in Ireland, it hopes to roll it out over time, targeting high net worth investors rather than retail investors.
Sancus’s foray into the Irish property market follows the sale last year of GLI Finance’s stake in an Irish fund dedicated to small- and medium-sized enterprises (SMEs). GLI sold its 30.3 per cent stake and the loan assets it holds in BMS Ireland to the BPC Ireland Lending fund, which is managed by Beach Point Capital.
Sancus, which has exceeded £800 million in funding, has offices in the UK, Ireland, Jersey, Guernsey, Gibraltar and the Isle of Man. It has a goal of lending over £1 billion by 2020.