JBR capital launched at the start of 2015 to provide finance for prestige vehicles. Jonathan Minter speaks to founder and managing director Darren Selig about how the first year has gone
When JBR Capital launched at the start of 2015, the company was clear that it was looking to provide specialist finance for the top-end prestige motor market, which founder and managing director Darren Selig felt had room for a new, dedicated player.
Speaking to Motor Finance just over a year later, it appears this suspicion was well-founded, as in its first year, the lender wrote in excess of £60m worth of advances. "It’s not just the amount we wrote, though, we built with real foundations that should, in 2016 and 2017, really catapult us to become the number one finance house for high-value vehicles," he says.
Other aspects have grown in order to keep pace with demand, he says. Headcount grew from an initial 11 to 20, while maximum loan size has increased from "about £1m to £1.5m" to £2.5m.
JBR has already hit its self-imposed £2.5m ceiling in a refinancing deal for a collection of 17 cars for a private individual, and Selig says the maximum loan size may increase in the future.
Selig credits part of JBR’s success down to the fact that, as a dedicated high-value lender, it is able to offer more flexible products than other lenders where high-value vehicles make up just a part of their operation.
For example, when valuing a vehicle and looking at residuals, JBR will use CAP, but it will also use its own people to establish values. Selig says: "Because we’re independent, we’re not constrained by third-party data providers like CAP. So we’re quite happy to, and indeed do, a lot of research and valuation work on vehicles. Especially when they’re specialist vehicles or vehicles not in CAP. And we’re quite comfortable to go well outside of those parameters should our own valuation work stack up.
"We’re very happy to live or die by our own sword, to make our own judgements, and lend on that basis, and I think that’s what people find refreshing."
Similarly, when it comes to assessing credit, JBR will use credit reference agency searches, as other lenders do; however as so many high net worth individuals don’t necessarily fit into normal credit profiles, JBR also assesses candidates beyond this.
According to Selig, this has resulted in customers getting access to credit they might not have necessarily otherwise got, as it allows JBR to structure a deal around the customers’ personal circumstance, based on how they structure their lives and their finances, and what they want to achieve.
Selig adds: "Standard products often don’t suffice. Things like refinancing 17 vehicles for £2.5m is a fairly tailored and bespoke product. So we do anything from plain vanilla, up to raspberry ripple or pistachio, if you will."
One of the challenges new lenders have faced recently is how to reach the market with finance. The majority of large brokers today have robust lending panels, and dealers are, if anything, looking to cut back on lending panels as they seek to lessen the regulatory burden imposed on them by the FCA. As a result, new lenders need to find a way to distinguish themselves from the competition.
For JBR, this was less of a problem, as it is less reliant on mainstream brokers for distribution compared to mainstream lenders. The brokers it does deal with tend not to work with a large number of dealers but instead with the customer base directly.
When asked what he has learned in the 12 months since JBR launched, Selig says: "When you start a business, you start with certain ideas about how you think things are going to go. And the thing I learnt very quickly is you can’t predict everything. A month in this market seems like a long time. And the market, and what people want, constantly evolves."
One example of this was the upping of the maximum lend Selig mentions. The initial plan was that the average lending balance would be approximately £100,000, however after a year that number sits at £185,000, and is growing.
According to Selig, it became apparent very quickly that the upper limit would need to be raised, and JBR reacted by doing so. Part of the reason why JBR underestimated the upper limit is that it didn’t fully anticipate the appetite for multiple car buys. One of the reasons why this has grown in recent years is that classic and performance cars have become in vogue investments for high net worth individuals, who now compete with enthusiasts for these vehicles.
Relatively soon after launching, JBR signed a white label agreement with McLaren. According to Selig, he has had a personal relationship with McLaren for a number of years, and this helped provide the impetus for the two to work together. In addition, he says: "They felt as a small, independent niche finance house that we had a very good understanding of their product, were empathetic with their customer bases and could service their requirement quite nicely."
Following a successful launch year, JBR has a number of plans in place. These include some new distribution channels with dealers, brokers and manufacturers which the company isn’t able to talk about yet.
It is also planning to go through a full rebrand. In 2015, the company kept its public face deliberately quite low, however in 2016, Selig says JBR will be pushing a rebrand into the public consciousness with a more concerted effort.
As well as this, it is planning on launching a bespoke scoring system for deals under £100,000. Recognising that one of the company’s selling points is the personal, manual system it employs to deal with customers, the system won’t see people rejected from credit; they will either be accepted or referred to a manual underwriter. However, he says: "We recognise that we can transact a lot of these (deals under £100,000) by building our own scoring system, which is our own intellectual property which will help give customers quick decisions. How we fit that into our philosophy is the system will never see a customer declined."
Finally Selig says the company is on course to increase its total lending to in excess of £100m in 2016.