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Prospect capital co-founder Denny Lane explains that while he cannot offer certainty about what is coming next, investors and borrowers can be confident that openings are still there. He spoke to Emily Moore
Ask Denny Lane for his economic predictions for the next 12 months, and his answer, accompanied by a self-deprecating smile, reflects a sentiment common to many.
‘Unfortunately, at this time it is almost impossible to say. I wrote to our investors earlier this year saying that I thought we had seen the last of the interest rate rises, as this was the general view in the market, and then look what happened,’ he said.
‘Economically, the past few years have been very turbulent, as we have bounced from Brexit and Covid to Liz Truss’s mini budget and subsequent inflation and interest rate rises. While a lot of people would like some certainty about what is coming next, nobody is in a position to offer that. Having said that, inflation still isn’t under control and therefore further interest rates look almost certain.’
While unable to predict the next event to impact the economy, the co-founder of Prospect Capital is much more confident when it comes to the company’s position and reputation within the specialist lending market and, most importantly, his company’s model.
Having moved to Jersey from his native London 25 years ago, Denny launched the financing firm nine years ago alongside friend and fellow investment and corporate finance specialist Matthew Lawrence, who is also the company’s single largest investor and chairman.
‘It was just a few years after the financial crisis of 2008/09 and we could see that there was an opportunity to establish ourselves in the specialist lending market, which was – and remains today – very buoyant,’ said Denny.
‘Matthew runs a family office in Gibraltar and is very commercially minded which, coupled with my knowledge and experience of lending, helped us to build a very strong team, which includes an in-house legal expert, highly experienced underwriters and a rigorous compliance department.’
Headquartered in Jersey, the company also has offices in Gibraltar and London, with the 12-strong team employing an ‘entrepreneurial but prudent’ approach to its business.
‘Over the years, we have built up a very strong network which means that we are lucky enough to be presented with lots of interesting opportunities to consider,’ said Denny. ‘Most of our clients are high-net-worth individuals, entrepreneurs or property developers or investors, and the secret to our success is being able to identify the right opportunities with the right people.’
And this assessment part of the job is, says Denny, more important than ever in today’s ‘turbulent times’.
‘The world is facing choppy waters, so you have to be very mindful of the situation and take a good, hard look at everything you do,’ he said. ‘With his commercial acumen, Matthew steers the ship very well and we are very thorough in making sure that we cover all the basics and that the people, assets and jurisdictions proposed are the right combination.’
Working with both commercial and residential property developments and acquisitions, Denny says that Prospect Capital specialises in high-value deals.
‘Our sweet spot is very much in £5million-plus real estate, mainly in London and the south of England,’ he reflected. ‘We have particular expertise in the prime market in central London and we also operate a joint-venture side where we partner with experienced developers to purchase assets.
‘In some instances, we buy land unconditionally and then work with planning authorities to obtain permission for development. Once this approval has been granted, we either sell the site with the permissions in place or we undertake the development ourselves, often working with a construction company in Southampton which Matthew seeded 17 years ago.
‘This firm has a huge amount of expertise in everything from planning applications and surveying to construction and, from our point of view, it brings the added benefit of being part of our group, therefore reducing any risks associated with the project.’
Acknowledging that mitigating risk is a significant factor in all areas of the business, Denny adds that Prospect Capital’s approach to this is also key to attracting both co-funders and clients.
‘When we started out, Matthew’s family office in Gibraltar was the largest single investor, providing a lot of the seed capital to get our loan book off the ground,’ he explained. ‘Now we have a network of other family offices and high-net-worth individuals with whom we collaborate on these ventures, in addition to further ongoing funding provided by Matthew’s family office.
‘From an investor’s perspective, our offer is appealing because, if we commit to a transaction, we always invest our own money. That means the investors benefit from the security we offer and they know that, in the unlikely event that something goes wrong, our capital will be at risk before theirs, which we understand is unique in this market.
‘However, because we are in a position where we secure our loans against very high calibre and reasonable liquid assets, such as prime property in London, we are able to provide the very strong returns which are partners have enjoyed for many years now.
‘Despite the market conditions and numerous challenges over recent years, I am very proud of our continued growth and also the feedback we receive from our network of partners. The continued support of Matthew’s family office and recent introduction of additional capital, enables us to focus on growth. Therefore, we are once again seeking to engage like-minded individuals, who are seeking excellent returns without compromising on security.’
And it is not just a strong proposition which Prospect Capital offers investors, with borrowers also benefiting from the team’s approach.
‘One of the greatest advantages of coming to us is the speed at which we make decisions,’ Denny explained. ‘If you want to buy an investment property for, say £5 million, and you went to a bank to request a loan, you risk missing the opportunity because of the time it would take for your application to be considered. Because we understand the opportunities and specialise in that market, we appreciate the need to act quickly.
‘There are also clients who do not fit banks’ rigid lending criteria despite being very successful and having lots of assets. In such cases, if we can see that the proposition makes commercial sense, comes with a good asset and a sound exit strategy, we will consider it.’
And, despite the turbulence currently in the markets, Denny says that there are still plenty of opportunities for both investors and borrowers.
‘While instability causes uncertainty, and it is definitely a difficult market to navigate at the moment, every difficult market offers opportunities,’ he said.
‘Despite the challenging conditions, entrepreneurs, borrowers and investors are still finding these opportunities and, as long as the applicant’s track record, assets and locations add up to a commercially sound project, we can facilitate these ambitions.’
