With the firm now operating under The FHL Group umbrella, B&C spoke to Catalyst CEO Chris Fairfax (pictured above) about how he sees the buyout boosting the lender’s competitiveness.
According to Chris, the resources brought to the table by The FHL Group will bring a raft of new opportunities while increasing the independence of Catalyst’s own activities.
“They’re leaving us to run the business operationally, but they're supercharging the financing and providing the huge depth of resource that sits within the group”, explained Chris.
“That extends to compliance, IT, Treasury, Capital Markets, HR, Risk and Legal — basically every aspect of their business that can support us.”
“We can lean on them for resources, which is great. And obviously, they have a huge amount of combined intelligence within that business that we can access. But day to day, operationally, there's absolutely no change.”
While Chris was proud of Catalyst’s growth since it was founded in 2017, which included increasing its headcount to over 30 staff and reaching total lending of £600m, he sees the acquisition as an opportunity to maximise its growth potential.
Over the next year, Catalyst is aiming to double its loan completions from the pre-acquisition lending of circa £125m per annum, by consistently completing £20m worth of loans per month. As for its long-term growth, Chris has big plans for that, too.
“The long-term growth plan is to achieve a loan book of half a billion. And I believe, over three years, that is an achievable target.
“Despite the improvements that we have planned, we're not taking that target for granted. We know that the competition gives us a great challenge,” added Chris.
Throughout his career, and particularly since the inception of Catalyst, he had seen the market become much more saturated.
“There is exceptionally high competition in our market, and there's been an influx of capital into the space from institutional banks and global asset managers,” explained Chris. “Ultimately, despite the fact we've done very well, it was becoming increasingly hard to compete without greater resources.”
Whilst the lender had secure funding arrangements for its loans, the equity contribution to the funding structure pushed up the cost of capital, resulting in comparatively higher interest rate charges in some areas, such as lower LTV bridging.
Meanwhile, fintech-driven automation was accelerating approvals across the market, giving rival lenders a further competitive edge.
Despite being able to offer products with competitive LTVs, the combination of these issues was making it more challenging for Catalyst to appeal to brokers.
With new diversified funding arrangements, Catalyst will be able to compete more freely. Initially, the lender plans to consolidate its product range and bring overall prices down by around 10bps across each product and loan size bracket.
With awareness of the growing importance of digital valuations, Catalyst plans to expand its offering in AVMs, desktop valuations, and dual representation, and implement a new front-end system that will reduce the amount of application input needed by brokers.
This is in addition to further product offerings: “We're due to launch a new product range in the coming weeks, and there is going to be an across-the-board reduction in our interest rates,” said Chris.
“Also, there's going to be some adjustment in our risk appetite, which will lead to a broadening of our product range and the specialist areas in which we operate.”
The business is also looking to expand staffing complement, with Chris’s current focus on the firm’s business development operations, where Spencer Gale has been appointed to lead the team and hire around six new BDMs.
While this is the start of the road for Catalyst under The FHL Group banner, Chris acknowledged there was still plenty of work to do to get the lender’s name out there.
“Ultimately, we are in an incredibly competitive market, but we are ready for the challenge of growing Catalyst into a market-leading specialist lender.”
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