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August 27, 2010updated 12 Apr 2017 4:20pm

Private money for new fund

A new asset finance fund drawing on money from wealthy private individuals is poised to start lending Should the scheme provide good returns to its pioneering funders, it may set a precedent for much wider involvement in leasing by private investors. Entrepreneur William Flatau has set up Asset Venture Fund as an extension of the Firstfunding.orgnetwork he started in early 2009

By Fred Crawley

A new asset finance fund drawing on money from wealthy private individuals is poised to start lending. Should the scheme provide good returns to its pioneering funders, it may set a precedent for much wider involvement in leasing by private investors.

Entrepreneur William Flatau has set up Asset Venture Fund as an extension of the Firstfunding.org network he started in early 2009. A combination of high processing speed and flexible underwriting involving experienced private lenders will be well suited to businesses looking for an alternative to bank lending.

First Funding matches private lenders with small businesses looking for loans, with rates and terms agreed between participants. It recorded “good levels of activity” during its first year in business, Flatau said.

After seeing private lenders express interest in property lending, Flatau discovered that the smaller exposure profiles and more stable values of equipment assets were attractive to investors. Supercars and agricultural equipment have been among some of the more unusual deals funded by private lenders.

As a result, web-based First Funding has teamed up with Asset Finance Solutions (UK) Limited, a large asset finance broker with a network of more than 25 salespeople. Together they intend to close deals with private investors, “solidifying the case for a dedicated asset fund”.

To date, four First Funding lenders have committed to this spin-off, and are ready to lend as soon as its IT systems are finalised.

Rather than linking individual lenders up to individual deals, the fund will act as a pool between several lenders. The fund will have a mandate to lend under specific criteria meeting an agreed credit policy.

Ideal transactions would be small cap deals in the £25,000 (€30,520) to £30,000 bracket, secured on “hard” assets such as construction plant, and spread over four years at a 15 percent rate.

To avoid potentially fraudulent applications, the fund will be aimed at repeat investments from long-standing clients, such as haulage companies and manufacturers looking for new equipment.

In many cases the deals will be those “with strong assets for reasonable customers, or reasonable assets required by strong clients,” Flatau said. Either way, they will be those that have fallen through the gaps for bank underwriters, but which retain a healthy overall risk profile.

“Our broker network is seeing up to 50 deals a month simply falling through the cracks in asset finance lending, because the funders are unwilling to consider anything but the strongest of deals. Our Asset Venture Fund is targeting those clients with deals that deserve funding, and we have innovative systems to handle the new business,” Flatau said.

Underwriting for First Funding’s asset deals will be carried out by a risk manager, with at least two of the asset fund’s directors signing off each incoming transaction. These will come in from brokers through a web-based platform, using digital signature technology to streamline and speed up the process of funding.

Fred Crawley

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