Sitting casually in an impressive boardroom in the leafy Essex suburb of Brentwood, the drivers behind new bridging finance firm Link Lending make quite a team.
This is not surprising when you consider the wealth of experience these three stalwarts of the mortgage industry share. Led by mortgage mogul David Johnson who sits proudly amid an abundance of horse racing trophies (his first real love), the team is made up of Commercial First managing director Philip George and former GE executive John Maclean, the new managing director of the firm the group are calling a future ‘honey pot’.
Link Lending is the reincarnation of Woodberry Securities, the bridging finance company set up by Johnson and Commercial First operations director Paul Gower almost 15 years ago or, as Johnson puts it, “when penny farthings were around”. Johnson calls Woodberry “the baby that never grew up”. But while the baby didn’t grow up, the market did.
“There was a lot of activity and we thought we’re either going to park this company or make it actually happen” says Johnson. They decided to make it happen.
Gower, who is still on the Link board, did not have enough time to devote to the firm if it was to get the push it needed. Maclean meanwhile had previously worked with George and held a senior position at GE. George and Johnson call his decision to take on this relatively unestablished company a “leap of faith” and one Maclean says he was excited to take.
“Any level of apprehension only came from the fact that I spent 15 years in corporate business and in my last role I was European managing director of a business where I had 100 staff and lent 2.5bn last year,” says Maclean. “To come from that to a job where I was back to getting completely stuck in again right down to putting the kettle on was a shock!”
Obviously to leave the comfort of an exec position at GE there must have been some incentives for Maclean but what were they? Maclean needs little time to answer.
“There are three reasons why I made that leap. First of all, the people involved. For a broker distribution business as we are who would you pick to have on your board, you’d have Philip George and you’d have David Johnson. The second thing is the potential of the market place. I don’t know any other financial market growing as quickly and the third thing was the chance to start Link from scratch.
Link now has a staff of almost 20 and its own offices in St Albans. Johnson says the baby has been reborn.
For such well established industry businessmen a move into the bridging market which has quite a negative reputation may seem like a bit of a risk but the trio believe their successful pasts will help to improve the market’s reputation, something which is already slowly but surely seeing a turnaround.
“What we’ve done in previous careers is be successful by doing the right thing. We compete by being better, not sneakier,” says Johnson.
George is quick to agree. “The industry has got a bit of a colour to it but we think that colour could be changed and the way to do that is enhanced service and transparency.”
The past 12 months has seen a surge in the number of bridging firms in the industry.
“Brokers are realising it’s not a product of last resort the way it was five years ago. I think there’s a dawning realisation that’s its less of a niche product,” says Maclean.
Despite bridging often being seen as a niche product there is, it seems, no typical customer. “It’s non-status by the nature of the product,” says Maclean. “There are not a lot of people on our books with County Court judgements or arrears. It tends to be Joe Bloggs in fairly good financial nick.”
Throughout the interview all three are keen to point out that Maclean is running the show, but how much input do Johnson and George have?
Johnson is eager to put the matter to rest.
“John was recruited to run company,” he says. “He’s the managing director. We’re effectively non-executive directors on the board. We have an equity position and we’ve got old heads so we’ll give John any help he needs but if it’s a success it’s down to John – and if it’s a disaster it’s down to John.” His last comment is met with laughter.
As the conversation moves to technology it becomes clear that industry expert Johnson isn’t as keen on the technological revolution taking place as other lenders seem to be.
“There is a strong rumour that the regulator is not happy with online offers and online completions because there is no cooling off period so those lenders that think it’s the panacea to controlling the market are in for a shock. Online technology will develop but I’m not sure if online offers are going to be so welcomed by regulators.”
Despite this, technology will play a part at Link Lending. Maclean talks of technology being used to “take away the mundane and administration, the repeatable processes” and online decisions in principle and case trackers will be live by the end of the year. This, according to Johnson, is “revolutionary for bridging, although it is bread and butter for other markets”.”
Another talking point surrounding bridging finance is regulation. The market is not regulated but Maclean is keen to point out this does not affect the way the company does business.
“We don’t do anything different in our non-regulated business than we would if regulated. Processes are the same. I think we will see more regulation in bridging. Lenders that have set themselves up in the way we have around transparency will be all right.”
When asked about Link’s unique selling point, Maclean answers without hesitation – the company’s manifesto rolls of his tongue.
“In terms of the product we took the same transparent approach we apply to our business. We have flat fees because we know it’s no more expensive for our lawyers to work on a case of 1m than one of 250,000. There are no exit fees, no early repayment charges and no minimum term. Service is also important so we have inhouse lawyers. That’s rare because few bridging lenders can complete on enough business on a daily basis to justify having a lawyer sat in their office.”
When we talk about distribution Johnson is characteristically confident “We’re arrogant enough to think that distribution will come our way, but of course we count on nothing. You may be pals but with people but you have to deliver service. You can’t live on friendship.”
This view is backed up by George. “We can get them to the water but John has to get them to drink,” he says.
The next year will see Link Lending aiming to achieve an aggressive target of gaining 10% market share but what then? Is it a case of build up and sell?
Johnson laughs at the suggestion.
“You’ve obviously been reading our CV,” he says. “I’ve never set out to sell a business – only to make it successful. Then people approach you. You have companies out there which have an arm’s length arrangement with some bridging companies and maybe they’ll have their eyes on buying something. Often these larger companies would sooner buy a successful business than start something. There will be an appetite to acquire Link. Bees will be round the honey pot – because this will be a honey pot.”
If Johnson’s prediction is correct and Link becomes a honey pot it will be the latest in a long line of successful ventures the trio have been involved with, both separately and together. So what’s the secret of their success?
“That’s a good question,” Johnson says. “There’s nothing magic about our approaches. But with anything we do, all sides of the table have to do well.”
George is quick to back Johnson up.
“Of all David’s businesses, everyone has done well out of it, not just David and the people close to him but also the brokers and the customers.”
To sum up, Johnson refers to his passion for horse racing, in which the same strategy has paid of.
“I think you’ve got to be there to help people,” he says. “Take Timmy Murphy who’s now my retaining jockey. He’s been in prison, he was an alcoholic, he was down on his luck but he had a talent. He just needed someone to be there and tell him he was a good guy.
“We’ve all made mistakes but that doesn’t mean the rest of your life is going to be a disaster. Now he’s on top of his game. In any business you need people around you.”