Tightening market offers opportunities
Media Release 11 August 2006
Tightening market offers opportunities as Rifleman Finance Group issues prospectus
Excited about the opportunities offered by a tightening finance market the newly launched Rifleman Finance Group registered its prospectus on the 2nd August, before making a major announcement on two imminent development deals.
Rifleman Managing Director, Murray Greer, says it’s a good time to be in business for a quality finance company like Rifleman because New Zealand’s major banks are already tightening their credit criteria.
Rifleman’s offer is for the issue of up to $150 million of interest bearing secured debenture stock – the Debenture Trust Deed permits further issues and the minimum investment in Debenture Stock is $1,000.
Greer says the company’s directors are confident they have identified a unique opportunity to provide expert, specialised financial services to New Zealand’s property development and property investment markets.
“Inflation, the slowing economy and tighter debt servicing costs will quell the market’s appetite somewhat but quality finance companies will prosper in this environment.
“Because banks occupy 95 per cent of the market their margins are narrower. So when we have high interest rates, rising inflation, a slowing economy and a flat property market the banks have no choice but to become more risk averse.
“This creates a fertile market for Rifleman. Savvy, informed investors – and there are plenty of them – will have done their homework and we are confident they will recognise the opportunity that Rifleman offers.
“That said however, we are in the enviable position of being backed by a wholesale co-investment funding arrangement with Fortress,” Greer said, referring to the Sydney based affiliate of the New York fund manager with some $US21 billion dollars under management.
The secured debenture stock offered consists of fixed interest debt securities which are of equal ranking and are secured by a first ranking security interest over the assets and undertaking of Rifleman Finance, subject only to permitted prior charges and charges given priority by legislation.
The interest rate for the debenture stock is fixed for the term of the investment and may be paid or compounded (at the investor’s nomination) quarterly or half-yearly (depending on the option selected by the investor when applying).
“We will lend primarily to experienced and proven property developers, with the company’s loan advances generally secured by second mortgage over real property. Rifleman will typically also require that its advances be secured by guarantees and other forms of collateral security.
“We intend to diversify risk by lending across a range of residential, industrial and commercial property. The company’s lending activities will initially be limited to New Zealand, though these activities may be extended to selected overseas markets in the future,” Greer said.
Critical to the analysis of prospective loans will be:
• The quality and experience
of the project sponsor
• The strength and quality of the cash flows generated by the property
• The experience and financial standing of the main project contractors
• That there is an unconditional and irrevocable lending contract with a first mortgage lender
• That there is an appropriate exit strategy through pre-sale or pre-lease agreements
Greer said the company has no plans to advertise its intentions at this stage.
“Advertising, in the light of the collapse of used-car related finance companies just wouldn’t be sensible because some investors are in knee jerk mode at the moment.
“We’re really interested in informed investors who understand that not all finance companies are the same, and to that end we will meet with professional financial advisers around the country to gauge the response to our offering and to make future adjustments where necessary,” Greer said.
Rifleman is confident of a positive reception from investors who recognise the company’s pedigree, having assembled some of New Zealand’s best business and property finance executives.
The team is headed up by Greer, who has more than 38 years in senior banking positions with Westpac and ANZ (including as Director of the ANZ Property and Construction Finance business unit where he managed loan portfolios in excess of $2.5 billion) and director Clint Webber who has management and associate director positions with a leading bank.
“We are all former bankers who value accountability, efficient lending processes and Rifleman’s ability to follow regulatory and accounting standards development, together with its capacity to manage debt efficiently.
“However, we understand that developers and investors want to deal with a stable, relationship-driven company without having to put up with the bureaucracy and the ‘tick the boxes’ structure of the banks.
“The fact that we will offer both senior and mezzanine debt is a point of difference. We take a flexible and personal approach to our clients with a commitment to developing strong long term relationships,” Greer said.
Rifleman Finance Group is a specialist provider of financial services to the property development and property investment industries. The company operates at the upper end of the mezzanine finance market with a fully documented lending policy.