Uma Rajah is Co-founder and CEO of CapitalRise and is leading the team as it rapidly expands. She is one of the pioneers in the FinTech sector, having spent the last decade building and launching digital lending platforms across the Consumer, SME and P2P lending space. She has a Masters in Engineering from Cambridge University and an MBA from INSEAD.
HB: Tell us a bit about yourself and CapitalRise.
UR: When Alex Michelin and Andrew Dunn (Co-founders of CapitalRise) approached me to spearhead the launch and growth of the business, I jumped at the chance. Having worked in the FinTech sector, I knew instinctively that there would be strong appetite for the CapitalRise product offering.
Michelin and Dunn had a firm grasp on the prime property finance and investment markets having developed and sold over £1bn of prime real estate with a further £1bn currently under construction. They understood first-hand how complex and onerous it was to raise money for these high spec developments, hence the requirement for CapitalRise. What they were missing in terms of experience was someone who understood how to launch these types of FinTech businesses.
Prime property is such an attractive asset class that hasn’t previously been accessible to investors, especially with returns of 8-12% per annum. I came on board to help them shape and grow the business – we knew the appetite for a product with such great returns, secured on properties with typically 66% LTV and a tax-free wrapper to boot would be hugely popular, and we were right.
HB: How does the CapitalRise platform work?
UR: CapitalRise is an online property finance marketplace that connects individuals and institutions to the finest real estate investment opportunities, delivering market-leading returns of typically 10% p.a.
Our expert team have over 100 years’ and £4billion of transaction experience and only select the finest investment opportunities for members. We have a strenuous due diligence process, which ensures that every investment opportunity has to pass stringent selection criteria to be considered for the CapitalRise platform. There are over 50 parameters considered and only 2% of lending opportunities presented to us make the grade and therefore become available to invest in.
We offer a range of different products to suit investors with differing risk appetites, from: senior, stretch senior and mezzanine debt to preferred equity. And we can provide funds for bridging, development and exit finance on prime property assets.
As mentioned average returns are 10% p.a. and to date we have paid over £2.2m to investors. Our investments are secured with a first or second legal charge over the property typically at 66% LTV, offering a highly attractive risk adjusted return. Typically, you can only achieve double digit returns when taking on investments with much higher levels of volatility. Investing in direct real estate debt, as an emerging asset class is proving a popular way for HNW and institutions to diversify their existing portfolios.
HB: Who is investing on the platform and how do you think that will develop?
UR: We have a varied investor pool and highly-engaged members, ranging from individuals investing their £20,000 ISA allowance right through to ultra-high net worth individuals and institutions investing millions. Institutional funding partners include family offices, banks and funds.
CapitalRise is attractive to these sophisticated investors as the risks are clearly much lower than more volatile markets. The average gearing on our loans is 66%, meaning property prices in prime London locations would have to drop by a further 34% for any investors capital and accrued returns to be at risk. What’s more, the founders of the business also invest in every deal, emphasising our belief in the quality of our underwriting processes.
HB: You’ve recently received equity funding from the family office of Rana Kapoor. Is the platform a place for FO investment too?
We are backed by the family office of Rana Kapoor, who is the Founder and CEO of YesBank – India’s 4th largest private bank. Family Offices are typically great partners for us, as many of them have keen interest and experience of real estate investing, especially in prime property. With CapitalRise, they can access more deal flow and avoid the hassle of growing their in-house origination team by utilising our origination and underwriting expertise instead.
HB: Given it’s now 10 years since the sub-prime crash, what is CapitalRise’s outlook for UK property market – both in London and in the rest of the UK?
UR: We naturally focus a lot on prime central London which has softened since 2014. Our view is that we are either at the bottom or near the bottom of the cycle now which makes it the best time to invest. This correlates with Savills’ research forecasts and that of other industry experts, where compound growth of around 20% in Prime Central London is predicted in the next 5 years.
Typically, you see the trends start in Prime Central London, and then ripple out to the rest of the country. So, that’s what we are expecting. Historically prime Central London is the most resilient sector and has recovered faster and stronger than other property asset classes when looking at all economic downturns over the last 50 years.
HB: What’s next for you and your team? Where will CapitalRise be in a year’s time?
UR: Our database of members has doubled in the last 12 months and this trend looks set to continue. The calibre of investment opportunities, strong risk adjusted returns and access to the tax efficient IFISA has made the CapitalRise platform very popular with investors. Each deal seems to fund faster than the previous and every deal this year has funded in under two business days by members alone. To meet this demand our average transaction size is growing exponentially, initially we were completing loans worth £1-3million and we are now finalising loans of £10million plus per deal.
To match demand and growth potential, we are looking to double the size of our team in the coming months. We’ve just added two more experts to our lending team, including a new Lending Director. This means we can boost our capabilities for larger deals for prime institutional grade property. In parallel we also plan to grow our marketing, investor relations and product team over the next 12 months.
Along with a healthy pipeline of future opportunities that we plan to launch over the next 12 months, we are very excited to be launching our next investment opportunity to our members in just a few days.
To learn more about Capital Rise visit www.capitalrise.com
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