Vector Capital plc (LON:VCAP) Chief Executive Officer Agam Jain caught up with DirectorsTalk for an exclusive interview to discuss what the company does, products & services it offers, highlights from, their latest trading update and what investors can expect from the company in 2022.
Q1: Agam, can you first off just tell us what Vector Capital does?
A1: We provide bridging and development loans to SME property developers. Currently our loan book is circa £50 million and we’ve got a roadmap to get it up to £100 million over the next two years so quite an ambitious roadmap.
We’ve got a 20-year track record in this sector, we listed in the December 2020, and one of the things that is special about us is we’ve got a very low head count with a very high technology mix.
Q2: Could you give us an example of the products and services that you offer?
A2: We can get deals done very, very quickly and so if for example, you want to go to an auction and you want to buy a rundown property with a view to refurbishing and then selling on, then we are the type of company that you would come to. We can give you a decision in principle on the phone so that you can then go to the auction and bid with confidence, knowing that we’ll be able to provide the finance for it. A lot of these type of projects that we finance are with people have bought old office buildings which are not in use and then they convert them to flats.
We’re also specializing in very complex transactions that normal high street banks can’t really manage, we also do projects where somebody wants to do ground up development and they’re not in a position to make monthly interest payments, we can roll it up for them so that at the time when the project is completed and they start selling the property, then we get our interest at that stage.
So, in summary, really bridging finance until a borrower can exit through either selling the property or refinancing at lower rate on the high street.
Q3: Now, you’ve just issued a trading update. Can you talk us through the highlights from the update?
A3: So, as at 31st December 2021, we were able to show a 27% increase in our loan book, up from 36.4 million to 46.3 million, at that date we had about 79 loans with an average loan size of about £586,000.
I suppose average loan size is useful up to a point, but our largest loans would be around £3 million and then we’d have smaller ones at £50,000/£80,000 but the average was just a tad under £600,000.
Our other thing was that as a result of the strong loan book performance, our revenue is going to be ahead of the market expectations and we’re just waiting for the audit to be completed around end of March, but we expect it to be not less than pipeline £3 million, which will represent at that level even 24% growth over the previous year.
The company expects to release the final results early April and declare the final dividend at that time.
Q4: You’re listed on AIM, can you tell us more about your dividend policy?
A4: Our attitude is that whilst we are getting ourselves known in the market, we’re paying a very high rate of dividend and our intention is to distribute around 40/45% of the profit for the next two years. It’s not in set in stone but as the profits increase, the shareholders will just get an increase in dividend, but that’s our policy.
Q5: Finally, can you summarise for us what investors can expect from Vector Capital in 2022?
A5: So, as I said, we’re quite an ambitious and dynamic company, we’re trying to go places so a lot of our energy has been in making sure that our infrastructure is solid and fit for scaling up.
We’re about to implement the next version of our loan management software platform which should go live around March, and it’ll just be able to handle a lot more of the processes. We’re virtually handling 99% of our processes on the software and this will take us virtually up to 100% which means that we can scale up the amount of activity without any further increase in overhead.
The other thing we’ve done just now is we‘ve appointed Gordon Robinson as a new non-exec director. Now, he comes with about 30/35 years of top level banking experience, specifically in the real estate finance sector. So, that will be a significant addition to our expertise at the top and we’re expecting a lot in contribution from Gordon.
The other thing that we’ve got planned is we’ve got a large database of brokers that we’ve kept at bay and we’ll start to engage with more of them to increase the deals as our capacity increases.
We’re hoping to do an additional raise at some time in the year which will allow us to access the further funding lines and there’s still a lot of scope for gearing that we haven’t yet utilized.
So, all in all, we want to show significant growth in all the KPI, particularly loan book growth, and an increase in trading profit whilst keeping the costs under control.
