Aquamore's Matthew Porch on non-bank's rapid growth
It’s safe to say Aquamore has been on a mission of late. Earlier this month, the non-bank lender was added to aggregator Connective’s lender panel for the explicit reason of enhancing Connective’s short-term commercial finance capabilities.
A few short months earlier, Aquamore clinched a spot on Yellow Brick Road’s panel, while the 2024 calendar year saw Aquamore become an approved lender with LMG and Purple Circle.
The Sydney-based lender has carved out a solid reputation in the commercial finance space since launching in 2016, which head of distribution Matthew Porch (pictured) reckons is “all starting to pay dividends with some of the big guys”.
Aquamore “is a well-established lender now”, Porch said in a chat with MPA, as evidenced by the raft of recent panel appointments.
“Aggregators are very apprehensive of just putting lenders on for the sake of it, because in the space that we play in, there tends to be a way of lenders popping up and disappearing, which is a bad look for the aggregator,” Poch said.
Track record is everything when reputations are on the line, so building that track record has been front and centre of Porch’s efforts over the past few years.
It has helped that market trends in commercial finance have swung in the right direction for non-bank lenders like Aquamore.
“The demand for private lending has certainly increased, and the requirement for a lender like us to represent some of these brokers is higher than ever,” Porch said.
Sweeping up
The rise of private credit, in Porch’s view, is a symptom of the traditional banks having a very strong emphasis on writing home loans, “and the cheaper cost of capital is probably what’s driving that”.
The increasing commodification of home loans, where marginally cheaper rates and a few bells and whistles become the only real points of difference, can result in a race to the bottom among the majors.
“That sucks up a lot of their resources and their allocations,” said Porch. “So a lot of the commercial deals are falling through the cracks, and they need people to sweep that up. That’s probably what’s driving a lot of the commercial credit funds that are popping up now.”
Give and take
Although the demand for private commercial lending is on the rise, a lot still goes into clinching a spot on one of Australia’s top aggregation panels.
That could be a symptom of the proliferation of private lenders of varying degrees of quality in the commercial finance scene, making adequate due diligence more important than ever.
“The onboarding process is very tedious,” said Porch. “It takes a long, long time. But again, the aggregators have an obligation to brokers and ASIC (the Australian Securities and Investments Commission)... to say that they’ve done their checks and balances and due diligence and they’re happy with the solutions that these lenders can provide.”
There’s a “pull and tug” to negotiating a panel appointment, said Porch, at least for challengers like Aquamore.
“The demand for a reputable lender that does things right is certainly something that the aggregators need. Again, when you don't have much of a track record, it's always ‘hey, we'll call you, don't call us’ sort of thing.
“You do chase your tail for a couple of years, but think it’s a testament to the work that everyone at Aquamore has done that they’ve started ringing us about conversations we tried to have three years ago.”
Going mainstream
When Aquamore was established in 2016, it was very much at the high end of the risk curve – engaging with riskier borrowers and writing riskier loans.
Porch joined the group in 2020, bringing with him corporate credit expertise as a manager at banking major ANZ.
“When I first came into the organisation, I did see a real opportunity to grow the business into something a bit more mainstream and a bit more risk averse, and that's exactly what we've done,” said Porch.
Pressed on what difference Aquamore brings to the table, Porch highlighted transparency.
“Traditionally, the private lending space has been very opaque,” he said. “You don't really know what it is that you're getting and you don't know where the money's coming from. You don't know who to trust.”
Does Porch, therefore, believe there is a problem of “rogue” or “cowboy” private lenders in commercial finance that come into the market with less-than-pure intentions?
“I think it was more of a prevalent issue than it is now,” he said. “There are still players in the space that do that, (so) we encourage brokers to use their own panel lenders, because the aggregator has done all the due diligence for them – you don’t get put on these panels for no reason.
“We're very much a transparent lender,” Porch said. “Everything that we do is above board, and we're here for the long run… We also have a judgmental credit approach as well.”
While the majors are very much policy driven, “we are very much relationship and client driven”, he said.
