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Enterprise Finance’s Danny Waters defends West One deal

Waters

Enterprise and West One are now part of the same group structure.  That is certainly news and we are flattered by the volume of attention we have had since announcing the deal.

Partnerships like this are actually a well-trodden path already. Similar deals have worked in the second charge sphere and the secured loan market. Norton Finance, Central, and Ocean Secured Loans have all had similar relationships between a distributor and a lender. These were developed in-house rather than through acquisition of a lender, but the result was the same.

In the bridging industry the market is a little bigger when measured by gross lending, but in terms of the number of deals involved or relationships with introducers, this is not a revolutionary way of doing things.  Meanwhile, Octopus Capital’s acquisition of Dragonfly last year shows that deals involving bridging lenders are not alien either.

Given the number of players in the bridging industry and the steady pace of growth, some consolidation is inevitable. The only reason this precise combination was not possible via a takeover before is that distributors just were not well capitalised enough.

For our group of companies the deal with West One is definitely a new and exciting development – part of something bigger. But as a day-to-day business this does not change anything for Enterprise itself. Both firms will carry on working in just the same way, and with the same long-standing partners. West One’s introducers and packagers will not see the journey of their deals change at all.

I have spent the last decade building up Enterprise as a business based on our relationships. And we would not change that model, because it works.

West One Loans will be part of the extended family – but run separately by the best people to do the job. It is my job to focus at the group level, with West One at arm’s length. Last week some industry commentators rightly pointed out that this separation is necessary. And Mortgage Strategy’s most recent Bridgingwatch, Positive Lending’s Chris Fairfax says that he would be concerned about any cross-selling. We agree – and that is why West One will retain its completely different management team, led by Duncan Kreeger and Stephen Wasserman.

For those that want to work with us, we will naturally respect every ethical boundary and continue to enjoy a mutually beneficial relationship. But for those that don’t, we will continue to compete with them aggressively, as we always have done – and as any business would.

We are not doing the deal to change the way either West One Loans or Enterprise Finance operate. It is so that both companies have the opportunity to grow even faster in future. In fact, reading Mr Fairfax’s piece reminded me of when Chris told me two years ago that we could never sell a distribution business, and that any business based on people is impossible to value. People who do not want to be bold can think that, but it is just not true. I am more optimistic than that.

Gross bridging lending is still seeing 24 per cent annual growth, according to the latest West One bridging index. But such a rate is steadying over the long term. Far more important is the culture of modern players like West One and Enterprise. At both companies we are actively driving that maturity and professionalism. Enterprise is fully FCA regulated and has an unblemished record in compliance.  In fact, we were amongst the first to embrace regulation. Continued growth is good news, but it is going hand in hand with other changes for the better, as the classic bridging lenders of the past gradually change into a new modern industry.

Looking ahead, short-term secured lending is a mine of opportunity. Figures from the West One broker sentiment survey show that brokers think gross bridging lending will soon hit the £3bn mark in 2015, having gradually consolidated lending at over £2bn per year earlier this year.

In our own distinct ways, and separately, Enterprise and West One will both be helping to push that total even further upwards in the next 12 months. For both companies, our growth will always mean growth for our partners and commercial relationships.

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