Challenger bank OakNorth is branching out, as it today completed its first deal with a global company.
The £15m loan to hospitality and real estate investment company Elandis, owned by the Logothetis family's conglomerate Libra Group, will be used by the company for "general corporate purposes".
The company had previously used asset-based loans, which were secured against a particular asset in its portfolio and had to be paid back when the development was sold.
“This facility to the corporate will allow it to be more flexible and agile,” said Mohith Sondhi, debt finance director at OakNorth. “Other banks are prescriptive in what they can use the money for, but we treat them like adults.”
Launched in 2015, OakNorth was designed to fill the gaps which the UK's larger banks left when they withdrew from lending to smaller businesses following the financial crisis.
“Most other UK banks will have looked at this and said it's too hard to do. It's a very complex structure, lots of offshore elements, assets all over the place,” said Ben Barbanel, OakNorth's head of debt finance.
Elandis has, in fact, bought and repurposed 2,600 residential units, 22 hotels, 11 commercial assets and several development projects, mainly across the Americas and Europe. By taking an in-depth look at the business, and understanding how it works, OakNorth was satisfied that it would be able to repay a loan.
“At the moment Elandis doesn't have a UK relationship, but they're hoping to look at more UK opportunities and establish a local relationship,” said Sondhi. “Now when they are looking for funding for a UK venture, we're the natural port of call for them.”
OakNorth itself has been building rapidly. It now has a £750m loan book, up from £192m last year, and has received £150m of repayments.