MA Financial Group managed fund backs short term lender, Funding.com.au in $37.5M debt and equity capital raise
31st March 2022
Online mortgage marketplace, Funding.com.au (Funding) has concluded a debt and equity raise of $37.5M, securing a fund managed by ASX-listed MA Financial Group Limited (MA Financial) as its first institutional debt investor alongside EVP, its anchor venture capital investor.
The senior debt facility, provided by a fund managed by MA Financial, will be used to diversify Funding’s capital base, enabling the business to scale its short-term mortgage finance operations.
Funding’s core business as a digital-only non-bank lender is short-term mortgages. It specialises in bridging finance, business lending and construction funding. It aims to reimagine how Australians access short term secured credit by using technology to create a faster and simpler process for borrowers. Its solution has been well received by borrowers and mortgage brokers with Funding experiencing rapid growth, having written over $250M in loans and grown its loan book at well over 100% YoY every year for the last 3 years.
Founder and CEO, Jack O’Reilly says the success of this latest raise validates the platform and the solution which is critically needed to serve an enormous gap in the marketplace.
“Simple loans take around 6 to 8 weeks to secure with a bank lender and often high-quality borrowers can’t get a loan at all for technical reasons. Using technology, we can already provide loans in days, and in future, it will be minutes. The market is moving so quickly and the industry needs to catch up,” said Mr O’Reilly.
Mr. O’Reilly is a mortgage lawyer and mortgage broker who identified a gap in the market for short-term mortgage solutions which were being overlooked by the big banks and often serviced by unscrupulous lenders, leaving borrowers in financial difficulty.
“Our proprietary platform has allowed us to consistently deliver very fast, secure assessments and settlements. Through automation and API integration of titling, credit and other checks required to assess an application, we’re able to deliver the quality of underwriting and origination of major financial institutions, at speed.
Instead of 6 to 8 weeks, our typical turnaround from application to settlement is 3 to 5 days. That’s unprecedented for short-term mortgage lending, let alone long-term property financing that is currently averaging around 40 days.”
EVP Investment Director Daniel Szekely sits on the Funding board of directors. EVP doubled down on its equity investment in the Company as a part of the round.
“Funding is replicating what has been achieved in the unsecured space with numerous personal and small business financiers providing trusted online solutions. Achieving this with secured lending is far more
challenging, but where delivered, it provides a solution that is far more cost efficient for borrowers. The market opportunity is enormous and it is drastically underserved by the banks that simply cannot write loans efficiently and cannot serve the short-term market. People who want to borrow money for a short time are paying too much interest, often on harsh terms,” Daniel said.
Jack and the Funding team have shown their ability to meet the market demand using technology to do what traditional lenders have always done, but at a much larger scale, faster, cheaper, within a trusted environment and now backed by MA Financial Group,” Daniel said.
Funding’s borrowers pay around 7% for their fast short-term solution, a premium compared to a long-term mortgage product in the 3 to 4% pa. However, compared to credit cards, personal loans and unsecured business loans reaching into the 20% pa – it is far more viable and a lot quicker than the banks’ mortgage product.
MA Financial Group Investment Director, Guy Kaufman, said: “We are pleased to be partnering with a business using technology to bring a more cost efficient and effective solution to Australian borrowers. The senior debt facility provided by our fund aligns with our broader private debt investment strategy offering financing to businesses backed by resilient collateral with a strong and proven performance track record.”
Mr O’Reilly added: “It’s typically mums and dads who need bridging finance as they might need it for three to six months while they bridge the gap between transitioning to the next property.
The banks don’t touch that market because they’re too slow and they want to focus on mass volume and the 30-year home loan market. The escalation of loans originating from mortgage brokers bringing this business our way demonstrates the value of our offering,” Jack added.
Funding will use the equity capital injection to continue to build out its technology and amplify its sales and marketing efforts within Australia.
For the AFR summary story click here https://www.afr.com/street-talk/ma-financial-tips-35m-debt-into-funding-com-au-20220325-p5a822
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Founded in 2015, Funding has rapidly grown to become Australia’s leading mortgage marketplace and has established itself as a reputable non-bank lender within the finance industry. Specialising in short term bridging loans, Funding’s product offering is reshaping the way everyday Australian’s can access mortgages and invest in property.
About MA Financial Group
MA Financial is an ASX-listed financial services firm specialising in asset management, lending, corporate advisory and equities. Since 2009 we have advised on over $100 billion of transactions and raised over $12 billion of equity capital for our clients. We have $6.9 billion in assets under management.
EVP is a venture capital firm focused on early-stage B2B SaaS and marketplace companies. We make high conviction investments, underpinned by ambition, pragmatism and a deep understanding of the software journey. Based in Sydney, EVP currently has over $150m under management. EVP’s growing portfolio includes companies such as Deputy, Practice Ignition, Shippit and Hnry.
Luke Starr 0419 446 879
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