UK finance start-up gets Blackstone backing

Pluto Finance, the London-based provider of stretch-senior loans for residential developments has won investment from The Blackstone Group’s Tactical Opportunities business and Clearbell Capital.

Pluto Finance, a London-based provider of stretch senior loans in the UK residential sector owned by Pluto Capital, has raised another £94 million (€113 million; $155 million) for its strategy.

The company has added the equity to the £100 million it raised in May 2013, with the fresh commitments coming from investors including funds managed by The Blackstone Group and London-based private equity real estate firm, Clearbell Capital.

The total equity gives Pluto the ability to lend £360 million to residential development schemes in London and the Southeast of England, said the company, which further explained it had made stretch senior loans to fund schemes with a gross development value of £170 million in the past 10 months. Transactions included a loan of £24 million for a scheme of 111 units in Surrey Quays in Southeast London and a loan of £12 million for a scheme of 36 units in West Hampstead, north London.

Pluto Capital was established in 2004 by Chris Faiz and Justin Faiz and the lending platform is managed via Pluto Capital, the firm explained.

The strategy is to lend up to 90 percent of the cost of developments, with a minimum loan size of £10 million. “These loans provide significantly more capital to developers than traditional senior debt providers, enabling developers to kick-start new projects and spread their equity across a greater number of schemes”, said the company.

The investment by Blackstone is not being made via a real estate fund but via its Tactical Opportunities business, which is primarily focused on specialty finance, insurance and asset finance. The unit recently acquired insurance company, Rothesay Life, that operates as a re-insurer for UK corporate pension funds, and it has started a small and medium enterprise business invoice discounting platform, plus has been busy buying credit card portfolios. 

Chad Pike, senior managing director at Blackstone, said: “We clearly see the difficulty that homebuilders small and large alike are facing in getting full funding for quality schemes with planning consents. Pluto's experienced team has impressed us with their ability to complete transactions quickly and to efficiently manage loan disbursements and construction oversight.”

Manish Chande, senior partner at Clearbell Capital LLP, said: “Economic recovery may be kicking in, but the impact of the last five years continues to take its toll, even on quality developers who are building in strong areas.”