Murray Holdgate

An interview with Murray Holdgate: UK development finance sector will see banks 'start to come back' post-Brexit



In an interview with Development Finance Today, Murray Holdgate, co-CEO at Platinum Rise Capital Partners (pictured above), discusses the state of the UK development finance sector post-Brexit and gives us a sneak peek into its recent joint venture in the five-star hotel space in Liverpool.

In a recent story with Development Finance Today, you mentioned that you’d be looking to move further into the social housing sector. How important is this market and how do you see yourself becoming more involved with it?

The UK is facing a housing crisis where supply clearly isn’t meeting demand. I feel the construction industry is struggling to attract new, young talent to the workforce, which is driving up the cost of construction and adding pressure to affordable housing. The traditional housebuilding community is finding it challenging to change its business processes, which is hindering its ability to increase output to solve this problem. We can also look at the modular funding options that traditional lenders may pass up due to inexperience. Modcon Global — our modular construction arm under Platinum Rise Capital Partners (PRCP) — is looking to further partnerships with councils by producing and delivering quality and sustainable modular housing. This is how we see expansion and can help to bridge the gap in the social housing sector.

Other than modular housing, are there any other sectors Platinum Rise Capital Partners would be looking to gain a stronger foothold in?

PRCP hosts a suite of diverse subsidiaries, and under Platinum Rise Finance, PRCP has recently joint ventured in the five-star hotel space in Liverpool, thus unlocking unique opportunities in listed buildings. Working with high-quality tenants is a very sustainable model to generate value and a steady income after stabilisation. The beauty of bringing a top brand to a unique building and tying up multiple contacts in the food and beverage industry, spa and five-star hotel space all under one roof is very rewarding. This flagship Liverpool icon will be announced soon, and we will continue to look at these unique opportunities. 

Second, Modcon Global is joint venturing with IRONLAST to create a value brand that leases containerised safe rooms in Africa and the Middle East to the shipping, oil, gas and security sectors. These modular-style boxes provide immediate safety by way of ballistic steel, air filtration, camera systems, food and power when under threat in high-risk areas while waiting for rescue from terrorists or pirates. We see huge upside potential in this market alongside our existing offerings and dedicating increased UK sales resources to those companies headquartered in emerging and frontier markets.
 
How do you expect the UK development finance sector to perform after a Brexit deal has been agreed?

Foreign investors are still queuing for BTL properties, thanks to the weak pound, undeterred by Brexit and taking a longer-term view. We still see growth in our popular markets of commuter London, Manchester, Liverpool and Birmingham, as this is a once-in-a-cycle opportunity to gain exposure and diversify. Post Brexit agreement, I still envisage more lenders looking to deploy capital in the space.

However, fiercer competition means a lower rate return as lenders fight for market share. Banks will start to come back into the sector, squeezing out others and requiring less yield for larger capital deployment looking for higher-octane returns vs mortgages. We are prepared for this with our unique lending strategy alongside our underwriting business that successfully makes global sales. We can find value in both upstream and downstream quantifying, keeping funding and sales within one ecosystem, therefore, maximising profit and control vs risk. At the end of the day, sales are the exit strategy of lending, and at PRCP we generally reverse engineer schemes knowing what is saleable, and potentially forward-purchase by matching that against what we are comfortable lending on. In 2020 (or whenever a Brexit deal is finally agreed), the lending space will always find a level comfortably versus sales — mortgages will remain competitive in this interest rate environment and people always need a place to live!

How did you get into the industry?

My background has always been in the investment banking/broking space since I was 18 years of age, working on foreign exchange, bonds and equities, which helped to shape my view of all things financial. I specialised in large amounts of debt, traded between banks — which moulded my non-emotional view of lending — and learned how to spot problems before they occurred and quantify risk. My current business partner came to me with an idea regarding lending capital to boutique developers. I quickly realised that there was a gap in the market for a lending platform using Asian capital from high-net-worth individuals and family offices looking for exposure in the UK property development space. With their lack of experience, it was down to us to create Alpha SPC, an asset-backed, fully project-managed, tax-efficient conduit. I decided then, after 13 years, that it was no longer the time to be a ‘slave to the screen’ (I had six of them) for up to 14 hours a day and retired from the business at the top of my game. Aft
After many trips back to the drawing board, strategy meetings and striving for entrepreneurial success, we evolved into the group PRCP, which houses a full suite of subsidiaries covering lending, underwriting, sales, modular construction and furniture packs. We have managed to evolve all of these successfully by spotting complementary gaps in our business, hiring industry-respected, seasoned and dynamic leaders that now head each vertical. To quote a close friend and mentor of mine: “I’ll always take a meeting and I’ll always hire someone who I think is smarter than me.” 

If you didn’t work in development finance, what would you be doing?

I was on the path for management in my previous role, having taken a multitude of exams and a board level directorship that would have meant more scrutiny, monotony and desk work. The high levels of regulation meant increasing overheads and less appetite for risk (ie over time) — the more you put in, the less you made/got out, soon to become death by 1,000 cuts. Switching industries was merely something I was passionate about from the start, having worked on building sites from the age of 13. Property development is in my blood, with my father and cousins highly regarded within the industry. So being able to marry my investment experience with development means we are a finance company that has chosen property, not a property company playing finance.


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