BFS: There could be more mergers and acquisitions in the bridging market

Michael Lloyd

July 31, 2019

There could be more mergers and acquisitions in the bridging market, Steve Barber, managing director at Bridging Finance Solutions (BFS), has predicted.

This follows the Competition and Markets Authority (CMA) clearing the acquisition of Charter Court Financial Services Group by OneSavings Bank yesterday. This will create a lender worth more than £1.6bn.

Barber (pictured) said: “I think there could very well be more mergers and acquisitions.

“I think that the market is due a fair bit of consolidation but that’ll come as a result of the market maturing like the mortgage market did in the late 1990s where lenders evolved into their own niches.

“I think bridging lenders will evolve into their own niches, like the size of their loan-to-value, or whether they offer development finance or just bridging. I think as a result of that, that’ll drive some consolidation in the market.”

BFS is a northern lender based in Merseyside so Barber was keen to point out that’s the area he speaks for, and not the south east and inside the M25.

He added: “I can say that investors are migrating north in search of yield and from our direct experience small scale development refurbishment and conversion projects are booming in the north and a lot of investors are looking to add value to projects rather than just purchases.

“There’s been a fundamental change in structure too so the vast majority of what we’re granting is to limited companies.”

BFS’s H1 results showed its loan book grew by 31% in the first six months of 2019 compared with the same period last year.

Barber put this down to sub £1m developments in the north and self-builds.

He said: “The vast majority of that growth has come from sub £1m developments in the north which is quite a niche market and there are lots of small-scale SME builders who need that kind of product. Self-build is another significant area of growth.”

In this sub £1m development sector he said most enquires are coming from professionals such as accountants, solicitors and banks, rather than brokers.

BFS is targeting 25% loan book growth year-on-year, even in this uncertain climate with the next Brexit deadline only months away.

Barber added: “There seems to be a lot more positivity in the market. 31 October is a critical date and the jury is out on Boris. It’s too early to say.”

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