New finance company launched by Equitable Group
Media release from The Equitable Group
New finance company launched by the Equitable Group
A new entrant to the finance industry, Bastion Finance Limited, was launched today by The Equitable Group.
The Equitable Group, which is owned by the Spencer family, currently has in excess of $350 million in funds under management.
Bastion Finance will offer a fixed interest first ranking secured debenture with returns generated primarily from commercial second mortgage property transactions and asset finance transactions on equipment, machinery, and commercial vehicles.
Investment will be made across a number of sectors, including rural, marine, manufacturing, and transport.
“The Equitable Group has had an exemplary record since 1972 of offering a range of investment products which have been secured by quality first mortgages,” Bastion Chief Operating Officer, Ross Aitken, said. “Through Bastion we will offer an additional investment option which will leverage off the second mortgage opportunities identified through Equitable, along with asset financing opportunities that we identify through the wider shareholding Group.”
“Equitable already has relationships with many borrowing clients but the asset finance or second mortgage finance needs of those companies are sourced through other providers. They will now be able to seek their asset finance or second mortgages through Bastion.
“Alongside this, Bastion’s association with the wider Spencer shareholding group will provide a unique insight into the risk profile of asset-based businesses, which will assist us to make quality lending decisions.”
Mr Aitken said that the company had already identified a number of good funding opportunities.
Bastion Finance will be taking a judicious approach to the market.
“It is clear that some sectors of the property market have reached their value peak, and investment in the second-hand car market has had terrible consequences for some investors and companies. We have conservative growth expectations and we have no intention of moving into the consumer finance end of the market.”
Bastion will be positioned alongside the Equitable Group’s traditional conservative first mortgage investments as a complementary higher return investment option.
“People who invest with Equitable tend to want to manage their risks, in terms of the types of investment, the management reputation, and the investment philosophy of the company.
“We expect they will welcome having an alternative investment option available through Bastion,” Mr Aitken said.
Backgrounder – Bastion Finance and The Equitable Group
Equitable was founded in 1972. It was purchased by the Spencer family, which has interests in a wide range of New Zealand companies, in 1992.
Equitable has two main business activities
- Investments – Equitable has four investment products; a tax paid first mortgage bond, secured property finance debentures, a mortgage income Trust and a performance based mortgage fund. All investments are secured by first mortgages over property.
- Property Finance - Equitable provides commercial property finance throughout New Zealand.
Equitable is known for offering investors low-risk first mortgage fixed interest investments, with returns coming from a portfolio diversified across regions and industry sectors.
Bastion Finance Limited will provide a complementary investment option, with returns from second mortgage property transactions and asset finance.
Bastion will leverage its association with Equitable, and the Spencer family’s wider shareholding group, to find and evaluate second mortgage and asset finance opportunities. Where a potential borrower has an existing relationship with The Equitable Group, Bastion will be able to access the Group’s knowledge of the borrower to make a very well-informed assessment of the borrower’s risk profile. Bastion will also draw on The Equitable Group’s experience to identify and evaluate new opportunities.
Governance and management
Bastion Finance will operate under the same stable team of experienced directors and management as the rest of The Equitable Group. The board is comprised of three non-executive directors with extensive experience of New Zealand business across a range of sectors, and two executive directors who have been with the company since its purchase by the Spencer family in 1992.
Bastion will operate within the strong financial covenants set by the company and agreed to by the Trustee:
- Total liabilities must not exceed 90% of Total Tangible Assets.
- Not less than 10% of Total Tangible Assets must be held in Prime securities.
- Related party transactions are restricted to an aggregate of 10% of Total Tangible Assets in any 12 month period..
Exposure limits - no one debtor’s outstandings can exceed 100% of shareholder funds.