UK group targets Australia non-bank lending market

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LONDON-listed Intermediate Capital Group (ICG) is the latest entrant into Australia’s fast-growing non-bank lending sector, acquiring Brisbane-based real estate debt investor Newground Capital Partners.

Trading as ICG-Newground, the new business will leverage the strength of ICG’s balance sheet and its institutional LP base to underwrite loans of $30 million to $200 million, offering more flexible terms and gearing to owners of value-add, stabilised and construction assets.

The business will launch an institutionally focused fund in the third quarter of this year.

Newground is an arranger, investor, and manager of real estate financing solutions in the Australian mid-market with offices in Brisbane, Sydney, and Melbourne. Led by Daniel Erez, it has closed over 30 transactions and deployed more than $200 million of capital, and currently manages investments on behalf of over 100 clients. Erez will joins as head of Real Estate Australia and New Zealand said.

“We are excited about the acquisition of Newground, which is a further positive step in the growth of ICG’s real estate strategy and footprint in Australia,” Martin Wheeler, co-head of ICG’s real estate business, said.

“We are looking forward to working with such an entrepreneurial management team to realise the attractive opportunities in the Australian real estate market.”

Real estate lending appetites have returned to pre-COVID levels this year, and unlike the GFC, the pandemic appears to have accelerated the flow of liquidity, according to the results of a survey by Stamford Capital.

The outlook for lenders is overwhelmingly optimistic, with 82% of respondents expecting to increase the size of loan books in 2021, up from 71% in June. Just 6% plan to decrease leverage levels this year, compared to more than a third in the peak of the COVID-19 pandemic.

More than 100 active lenders participated in the national survey from major trading banks and non-bank lenders to super funds, foreign banks, private financiers and second-tier trading banks. Over half of survey participants have loan books over $500 million.

In April, listed property group Centuria moved into the real estate debt markets space, securing a 50% investment in Bass Capital that presents a pipeline of opportunities worth more than $300 million.

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