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Lender raises $140m to secure march into SME space

by Reporter5 minute read
Money, raise

An emerging small business lender has announced that it has finalised its first round of equity raising at $140 million, claiming that the fresh capital would enable it to service “starved SMEs”.

Following its official launch earlier this year, Judo Capital announced on 1 August that it has secured $140 million from investors in its first round of equity raising, which it claimed would help fund its growth in the SME lending space.

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Commenting on the announcement, co-founder and joint CEO of Judo Joseph Healy said: “We’re extremely proud to have raised what we believe is the highest equity raising, pre-revenue, of any start-up in recent Australian corporate history, reflecting the huge demand for banking services from small and medium-sized businesses.

“We are delighted with the breadth and depth of our investor base, many of whom have indicated a desire to invest in future equity raisings.

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“SMEs have been starved of capital by the big banks, which largely require property as security against loans. At Judo, we’re turning the tables in favour of SMEs so that they get the service and funding they desperately need and deserve.”

David Hornery, also co-founder and joint CEO of Judo, claimed that the funds would help the lender achieve its goal of becoming “Australia’s first genuine ‘challenger bank’ for the SME market”, and thanked commercial brokers for their support since the venture’s launch.

“Since the commencement of trading in early April, engagement with the market and commercial brokers has exceeded our expectations and pleasingly we are well on our way of reaching our first lending milestone of $100 million to SMEs in Australia to help support their business aspirations.”

Judo has previously told The Adviser that it would partner with a handpicked selection of brokers.

“We are not the lender of last resort, so it won’t be a blanket accreditation to all brokers,” chief customer officer Chris Bayliss said.

“We will build our network carefully and gradually. We don’t see ourselves taking on any more risk than the big four. We will just have a better ability to understand that risk, in a way that a commoditised service doesn’t value.”

The chief customer officer has also previously said that partner brokers will be getting “unprecedented full access to [Judo’s] credit policy and CRM system, allowing brokers access to their customer information”.

“We don’t want to be hitting 50 per cent success rates with our broker partners — we want them to feel like they are an integral part of our business and hence approving the vast majority of the deals presented. They will know exactly what type of deals we want to do, will have close relationships with our relationship managers and be working with customers together,” Mr Bayliss said.

Further, Mr Hornery announced yesterday that a new Sydney office will be opening in September as part of the lender’s national growth strategy, which he said would be supported by a full banking licence.

Pending approval from the Australian Prudential Regulation Authority (APRA), Judo expects to receive its full banking licence by the end of the year.

“The incredible support shown by the local and international investment community marks the beginning of a new era in banking where trust and relationships once again take primacy,” Mr Hornery said.

[Related: Judo’s broker proposition designed around ‘trust and transparency’]

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