In the second part of this exclusive interview series with GBI Magazine, Praetura Investments’ partner Sam McArthur returns to discuss the business relief arena.
Sam McArthur discusses what makes Praetura the best-kept secret in the BR sphere, gives his description of asset-based lending, and explains why clients should look for diversification.
Q: Why are you the best-kept secret in the BR qualifying arena?
We have a very established track record of business-to-business asset-backed lending. We started our lending business in 2013 and we’ve got a lending team of over 100 people. They lend to businesses right across the UK and have lent in the region of £900 million to over 6,000 businesses in ten years. In that time, they’ve got a 0% net loss track record. That track record speaks for itself.
With our BR qualifying offer, investors get exposure to this team. As an investor, you’re buying into a secured lending trade with a very experienced team and a highly diversified underlying lending book. That’s why it’s a well-kept secret. The offer itself has a strong three-year track record but is less well known.
Q: How would you define asset-based lending?
I think many people think about property when they think of lending against assets, particularly in the business relief qualifying arena. The type of lending that investors in our offer are exposed to involves lending to businesses where there are actual hard assets as collateral. So that could be a machine, or a truck, or something that you can touch.
This means that if the borrower doesn’t pay, the lender can take ownership of the asset to recover a loan. That’s where our team has shown its skill over the years and built up a strong lending track record with zero percent net capital losses.
Q: Lastly, why should clients be looking for diversification?
If you look at most of the business relief qualifying offers available, there’s broadly a recurring theme of two types of asset class. One is renewable energy, and the other is property. That’s often some kind of property lending or investment in renewable energy-producing assets.
As I’ve described with our lending activity, it’s completely different. Therefore, if you’re an advisor looking to get diversification for your client, an obvious way to do that is by diversifying across offers and managers. You should probably look beyond that, and at the underlying investment, and the underlying risks, and look to get diversification for the clients in the underling trade or asset class. You might get similar types of asset exposure by diversifying across three different BR managers. It makes sense to look for diversification in underlying assets as well.
Sam McArthur, Partner at Praetura Investments
