B&C has now learnt that Dragonfly Property Finance has passed £750 million of lending and has its sights on the buy-to-let arena.

Editor, Jason McGee-Abe, spoke to Jonathan Samuels, CEO of Dragonfly, to find out more about Dragonfly’s loan book, what impact the Octopus acquisition will have and what plans are in the pipeline…

£750m MILESTONE

Dragonfly has just passed two significant benchmarks in lending. It has lent more than £750 million since inception and its loan book has just passed £300 million.

Its products are becoming increasingly popular and the outfit has grown organically. Jonathan said: “Bridging finance is our core product and always will be. Our buy-to-let, development and mezzanine lending is growing too.”

Touching on commercial finance, Jonathan added: “We’re serious about commercial and we like the space. We’ve been in this space for over 18 months now and have just completed £100 million of pure commercial transactions.”

OCTOPUS

B&C broke the news earlier this month that Octopus Capital, the holding company of Octopus Investments, acquired Dragonfly Property Finance for an undisclosed sum; a move which saw Jonathan and 15 employees join the asset manager as full-time employees. No-one from Octopus joined Dragonfly in the deal.

Jonathan told B&C: “We are becoming more integrated into Octopus and leveraging the finance team has opened up lots of new areas.

“Octopus has approximately 300 staff and becoming part of a larger organisation means that we now benefit from a very large and quality HR and IT team.

“We’re developing a back-end system with Octopus and revamping the website over the next couple of months. This will help speed up and enhance our application process.”

Jonathan first pitched the business to Octopus Investments four years ago, with a funding line being agreed in 2009, and he has maintained his role as CEO of Dragonfly Property Finance in the acquisition.

Jonathan said: “Now that I’ve moved over to become an employee with Octopus, I’m in regular meetings with the Octopus Senior Management and Board of Directors about the direction of Dragonfly and our whole strategic review for the next 3 to 5 years.”

BTL ARENA

Having been taken over by Octopus Investments, which has £3 billion of funds under management, Dragonfly certainly has a lot of fluid capital strength now to support it in its growth plans.

Dragonfly’s innovation has seen the lender launch a number of products over the last few years, with many of them branching into longer-term products. With rumours of the lender looking to attain a banking licence surfacing, B&C asked whether Dragonfly would be moving into the mainstream market.

onathan said: “We’re looking at how to enhance all of our products and because we now benefit from deeper pockets we can now facilate longer term loans. We have the ability to move into the mainstream market, but bridging remains our core business.

“We’re looking to use our quality attributes from bridging and with speed into the buy-to-let arena. We’re not talking 25-year terms but certainly 5-year products with a focus on residential buy-to-lets."

EXPANSION AND RECRUITMENT

Pre-acquisition, Dragonfly appointed Ludo MacKenzie as Head of Commercial Property Finance; now post-acquisition, the lender is on a big recruitment drive.

Jonathan said that due to Dragonfly’s sheer growth: “We’re looking to recruit a Head of Operations and bolster up our credit team, including a manager and support staff.

“We’re also looking to bolster our BDM team both internal and external and will start to make appointments over the next month.”
Another trend within the market and amongst lenders is appointing regional BDMs, B&C enquired if Dragonfly would look to incorporate this structure within its model.

Jonathan said: “Our model is less about areas and more about relationship. However, we’re not closed off to the idea of other areas. If someone had a great reputation and solid relationship with brokers and as long as they have the same ethos then we’d look at hiring them.”

BRIDGING RATE WAR

The market currently is in the midst of a bridging rate war, with lenders such as United Trust Bank and Precise Mortgages advertising lower bridging rates. Talking about the 'rate war', Jonathan said: “It’s all about the perceived risk in the deal and the lender’s costs of funds. It’s impossible to see how far rates will fall, but in theory they can. It will be interesting to see how it will play itself out; a lot of it though is in the detail. For example, with some 0.6 per cent rates are for LTVs of a maximum of 40 per cent LTV, which one could argue is just headline grabbing as there aren’t many deals done at that level.”

B&C asked whether Dragonfly would look to lower its rates too as a result of the Octopus acquisition, which Jonathan responded: “As long as we can see the right risk and balance then we would look into that direction.”

However, Jonathan did warn: “That balance has been out of kilter before when mainstream lenders offered low rates, lent at excessive risk, and did not have the buffer in their balance sheets to cope with a shock. So in regards to the bridging 'rate war', as you put it, one has to maintain that perspective of balance.”

PACKAGERS

As the lender grows, B&C wanted to know whether Dragonfly would be expanding its introducer avenues too... perhaps it may look to networks for example?

Jonathan responded: “We won’t be going to networks. We have very strong key relationships with our packagers, which is important and central to us and our business. It would breach our relationships with packagers if we went straight to networks.

“We’ve always been broker and packager-led and they’re the lifeblood of our business.”

FUTURE
Looking to the future in 2014 Jonathan has his sights on increasing Dragonfly's lending: “The next target for us is to lend £1 billion of funds, which will be a major milestone for us and we’ll look to grow the loan book to £0.5 billion too. It’s not about if we hit that it’s about when we hit that."

The Octopus Investments acquisition has been very well received, and many in the industry are excited as they understand that Dragonfly, along with its success story to date, is now part of a very strong organisation.

There are big things ahead for the current B&C Bridging Lender of the Year.