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August 1, 2009updated 12 Apr 2017 4:34pm

Ruffler-Base merger creates dream team

Ruffler Bank, which was recently acquired by private equity firm AnaCap, has merged with Base Commercial Mortgages, the specialist commercial mortgage lender, and rebranded as Aldermore resulting in a well-capitalised, recently established commercial lender which seems to have the potential to become much greater than the sum of its parts.

By Fred Crawley

Business opportunities for brokers
in new Aldermore-branded outfit

Ruffler Bank, which was recently
acquired by private equity firm AnaCap, has merged with Base
Commercial Mortgages, the specialist commercial mortgage lender,
and rebranded as Aldermore – resulting in a well-capitalised,
recently established commercial lender which seems to have the
potential to become much greater than the sum of its parts.

The new company will be the first British bank
wholly owned by a private equity house, and will start trading with
a book of about £70 million (€81.4 million). Roughly half of this
is in commercial mortgages at present, with the other half
comprising Ruffler’s former asset and property finance books.

According to deputy CEO Mark Stephens – who
founded Base in 2007 – Aldermore plans to grow this book to £100
million by year-end, with most of this growth to be driven by asset
finance and leasing sales. Similar rates of growth are then planned
for years two and three of the business.

While Aldermore will retain Ruffler’s
specialism in financing coin-op, vending machine and gaming assets,
it intends to develop other specialisms for its leasing business.
What those will be, says Stephens, is an issue still under
discussion.

However, it is believed that Aldermore will
engage in public sector IT leasing immediately, with some of this
presumably being introduced by fellow AnaCap holding Syscap, which
specialises in this area.

Further strategies will become more developed
with the appointment of a new head of asset finance. This will be
followed by the recruitment of new business development and lending
managers to add to the current 60-strong team.

Another new appointment will be risk director
Steve Barry, who will be backed up by an additional head of
risk.

Stephens emphasised that the new bank’s
lending growth would be tempered by a heavy focus on risk
management and due diligence, especially in building vendor
partnerships.

In addition to maintaining and adding to
Ruffler’s vendor relationships, Aldermore will be open to
connections with brokers.

According to Stephens, the company is “very
serious about commitment to the SME sector”, and will pick up a lot
of business that has been left behind by liquidity-constrained
banks.

As well as organic growth, acquisitions could
potentially be on the menu, either of portfolios (most likely in
the £20 million-£70 million range), smaller lenders, or even
brokerages.

“The type of management team we are, and the
type of company we are, means we will be open to considering any
potential acquisition,” said Stephens.

This willingness to make different businesses
fit together effectively is very much in evidence from the merger
that created Aldermore.

Previously, Base had enjoyed a highly
developed IT system with a considerable overcapacity, plus premises
and staffing levels capable of absorbing rapid growth, but had to
cut business drastically in July 2008.

The merger has seen Ruffler’s business routed
through the sizeable back-office infrastructure of Base, with all
lending now processed through the same IT systems.

Meanwhile, the commercial mortgage side of the
business will potentially be able to make direct sales to leasing
customers, rather than working through brokers as it had done
before.

Stephens, who has worked in SME lending for 25
years, said that Aldermore’s aim was to create a long term market
presence through investment in customer service and competitive
pricing:

“Our products are intended to add value
through service and speed – as such there will be a slight premium
in our pricing, but it is worth bearing in mind that Ruffler has
not raised its rates in 18 months.”

Given that the Alder is a tree well known for
being quick to spring up in clearings left by the fall of larger
trees, it will be interesting to see if Aldermore’s performance
over the next six months matches its namesake.

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