Andy Whelan, executive director of Tenn Capital tells Emily Moore why this is an exciting time for alternative lenders
‘IN the midst of every crisis lies great opportunity.’
These words, attributed to Albert Enstein, have been borne out many times over the decades, particularly in business where changing economic fortunes often favour those brave and insightful enough to recognise, and act on, the opportunities presented.
One finance professional who did just that is Andy Whelan, now the executive director of Tenn Capital, which has just opened an office in the Island after acquiring Oaklands Secure Lending Ltd.
Having originally moved to Jersey in the mid-80s to escape the recession pervading his native Ireland, Andy spent 25 years working in investment management before transitioning into lending around a decade ago.
‘Prior to the global financial crisis of 2008, high-net-worth individuals had easy access to lending facilities,’ he reflected. ‘After the crash, that access disappeared, which created an opportunity to establish a lending business providing funding to high-net-worths.’
In 2013, Andy co-founded a Jersey-based business specialising in property bridging and development finance, the company had offices in the UK, Ireland, Jersey, Guernsey and Gibraltar.
‘This business was successfully sold to a larger AIM-listed business and after 10 years I left (just over a year ago) to set up Oaklands Secured Lending. This business has just been acquired by Tenn Capital, a company set up in Guernsey by a former colleague of mine, Matt Watson,’ explained Andy.
While the core principle of providing finance to ultra- and high-net-worth individuals has remained the same in each company, Andy says that being part of Tenn Capital gives the firm ‘a wider remit’.
‘Tenn Capital has a significant credit facility with Elliott Advisors (UK) Ltd, which is a UK-based investment management company,’ he explained. ‘Excited by what is happening in the lending space and the ability for good risk-adjusted returns, Elliot recognised that Tenn offered a unique offering for people looking to invest in residential property anywhere in the world.
‘This is not a straightforward process for people who are not already in the domiciliary where they wish to buy property and it can be difficult to get financing because banks like you to be locally based. We cater for that niche market of international high-net-worth individuals (HNWIs) and ultra HNWIs who, for example, might live in Dubai but want to buy property in Spain or New York.’
Adding to the company’s USP, says Andy, is the speed at which the deals can be approved and the amounts which clients can borrow.
‘In many cases, deals of this nature would take six or nine months to complete; we can get them approved in two to four weeks,’ he said. ‘We also don’t have a cap on how much people can borrow because we have a funder who understands what we’re doing and has a balance sheet to support it; so as long as the loan-to-value [LTV] is right, there are no limits.
‘This is a powerful combination because if you are negotiating a property transaction, being able to act quickly and with confidence that you have the funding available is vital. This is especially true in the current market, where there is the opportunity to negotiate some good discounts.’
Indeed, with inflation and rising interest rates impacting property markets around the world, Andy says much high-value real estate is now changing hands for less than it would have done a year ago.
‘Jersey tends to avoid the property shocks seen in other parts of the world so, while there has been a significant price appreciation over the past three years, which has led to a lot of stress on LTVs, we are unlikely to see any large falls in value,’ he said. ‘However, with rising inflation and the increase in day-to-day living costs, which are largely driven by the impact on oil prices of the war in Ukraine, sales of international UHNW property will be impacted.
‘This is largely because, no matter how wealthy you are, value for money remains important and wealthy people are fully invested. They don’t hold large piles of cash so they are looking for liquidity. This means that while many high-value transactions are still going through, properties are now selling at lower prices than they would have done 12 months ago.’
Another advantage of the economic climate for Tenn Capital, says Andy, is that pressure on banks has created a more competitive market for alternative lenders.
‘While this is not a repeat of the 2008 crisis, banks are under pressure because the interest-rate hike has led to a capital depreciation on the value of bonds,’ he explained. ‘That was a significant factor in the collapse of Silicon Valley Bank, as it had to sell longer-dated bonds to increase liquidity but the value of those bonds had fallen dramatically.
‘While UK banks are in a much stronger position – and there is no reason not to be confident in the UK market at this stage – the global situation means that alternative lenders are in a potentially exciting time of growth because of the speed and flexibility that we can provide for international lending.
‘This creates tremendous opportunities, although we are not taking high risks. We want the LTV to be sensible and we want to ensure that borrowers have good balance sheets and asset-liability statements. We also want to see them invest money in the projects which we are financing, and we fund these loans with both our money and finance from our credit facility.’
With a team of around 15 people across Jersey, Guernsey and Gibraltar, Andy says that many of Tenn Capital’s international clients come through corporate service providers.
‘We have a close relationship with brokers and offshore service providers such as accountants, lawyers and trustees.
‘While we provide a range of bridging and development finance, we don’t offer commercial lending. We are very much targeted towards the HNW and ultra HNW market and our focus is primarily on residential properties because that is our area of expertise.’