Future of Portillion hangs in the balance
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Stephen Knight, chief executive officer of Portillion, says the future of the would-be lender rests on it securing £110m of funding in Q1.
Knight says if it does not secure £110m of tier one funding by the end of the quarter he will reassess the future of the business.
Portillion currently has funding from RIT Capital Partners, Lord Rothschild’s family interests and Knight himself.
But he says this funding is only providing it with working capital and it still needs £110m in tier one capital.
Knight says: “We want to be in a position where we can raise something by the end of Q1.
“We may get to the end of Q1 and be close to gaining the required capital from funders and we may decide to go on for another three months.
“Or we may get close to securing funding by the end of Q1 but say that’s enough we don’t want to go forward - it could be any of these options.”
Knight adds: “We have to meet regulatory hurdles and to do this we are trying to raise tier one capital. We have a new firm of advisers and we are going to give it our best shot.”
It has recruited First Avenue Partners to help secure funding.
Knight says: “We have a fabulous proposition and blue-chip directors who have done their due diligence on Portillion as a company.
“We are hopeful we can move forward, but I can’t say whether we can or not as the markets are disruptive.”
Ronnie Baird, previously a director at the Financial Services Authority, is a senior non-executive director and chairman of Portillion’s audit committee.
And Gerald Gregory is a non-executive chairman, having formerly worked as a main board director of Britannia Building Society.
Knight adds: “Slowly but surely the mortgage market has to come back in order to get borrowers the mortgages they need.
“I don’t mean sub-prime or self-cert, Portillion is not going to do either of those, we are not even going to do interest-only mortgages. We will take a cautious approach.”
He says one option could be to carry out an Initial Public Offering, but this would be done later down the line once initial funding has been secured.
Knight revealed his plans to launch a lender called Checkmate Mortgages in 2007 which he later rebranded to Portillion in February 2010.
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Readers' comments (8)
Ancient Wisdom...is a mortgage broker in N3 | 5 Jan 2011 4:41 pm
..Knight must realise that to compete with prime lending, hes up against the big boys like HSBC, HBOS etc. Prime lending is what every lender does, and offers, and so anyone can get a mortgage online or direct only who is prinme with 20% plus deposit.
Its all down to rates now - and you had better offer good deals or underwriting designe dto lend, or you wont survive a year.
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Anonymous | 5 Jan 2011 4:56 pm
It does seem strange for a 'new' lender who has been around for over 12 months to have had more names than they have completions.
The financial pressures on a business that has been formulating systems for that time must be immense, as profit only comes from completions!
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Mike Fitzgerald | 6 Jan 2011 8:52 am
I hope that Stephen Knight and his fellow directors get the Tier 1 funding that they need to commence lending
Both clients and brokers need new lenders and it is in everybodys interest to see Portillion become a successful lender
Mike Fitzgerald
The EMBA Group
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Dennis Jason | 6 Jan 2011 10:40 am
Good luck getting the funding.
This sounds like if anything the easiest of the two crucial steps to launch - getting approval is likely to be even harder.
The Daily Mail recently wrote a very cynical article questioning whether GMAC RFC could be considered a success in evryone's eyes.
The FSA wrote in mortgage strategy recently that they "are guarding the gateway and strigently vetting applications...especially where the personnel involved have been involved in problematic operations before"
Given the FSA fines for GMAC for arrears management during the period that key Portillion folk were there, and given the subesquent performacne of GMAC loans these guys are in for a tough time getting approved - it's a big gamble for any investor.
On top of this, back in 2008 Checkmate announced they had a £10m IT system ready for a 2009 launch giving a "20 minute internet based mortgage offer" - they'll be lucky if this is compatible with the MMR - but then again Steven has been lucky in the past!
All the best to those involved
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Anonymous | 6 Jan 2011 2:03 pm
Seems like Checkmate to me Stephen.
Suggest you decide to rest on your past laurels and allow the market to evolve without your enterprise.
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Checkmate Indeed! | 6 Jan 2011 4:12 pm
The last statement is very much an accurate state of play. Below are my previous comments from last February, I feel matters can only have deteriorated.
Anonymous | 22 Feb 2010 10:23 am
Lots of Chiefs....lots of cost.
The BS movement is currently in disarray due to the funding crisis in the markets. Retail deposits in isolation are somewhat insufficient.
A company which has yet to launch, that is burning cash with a huge infrastructure cost; is now 're-branding' following "the result of extensive research carried out in the fourth quarter of 2009"
Yep, and adding more costs!
So does this all mean an imminent launch?
Eh no, the time is "still not right".......
Hope I am wrong but even though the strategy is OK'ish it all sounds a little pretentious re-branding at this juncture.
Perhaps the actions of a company with lots of cash and too much free time?
Portillion a Fermé - Gate (still) Closed?
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Gray Haired Underwriter | 7 Jan 2011 12:13 pm
Perhaps the fund providers are a bit wary of someone so closely linked to GMAC? After all would you lend £110m to a company that seems to have so many people closely tied to a failed lender?
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Dennis Jason | 7 Jan 2011 2:32 pm
The £110m isn't being lent - it's being invested as capital - even more risky. GHU is right though - having got the capital who will provide the money to lend?
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