Dragonfly eyes commercial lending after takeover

Residential bridging loan specialist Dragonfly Property Finance is set to accelerate its expansion into commercial lending following its takeover by backer and asset manager Octopus Investments.

Octopus’s takeover completed this month just as Dragonfly’s loan book topped £300m on the back of an improving housing market. But founder Jonathan Samuels said he is planning for commercial to “reach parity” with residential by 2015.

“Half a billion has got to be the next target,” he said. “Post-deal it’s foot down firmly on the accelerator, trying to get there as quickly but, I must emphasise, as safely as we can.”

After launching Dragonfly in 2008 with £25m of backing from Octopus, Samuels achieved rapid growth for the business, initially as a bridging loan specialist before broadening the range of residential loans and this year moving into commercial.

Samuels said: “For Octopus it was a case of being able to control the entity and deploy funds more freely.” The terms of the deal are undisclosed.

The Dragonfly brand will remain with Samuels as chief executive, although staff will become employees of Octopus.

“Financial clout is becoming more and more important and perhaps the differentiator in some of the deals we do. Rates are falling, some of the loans we’re doing are larger and it is harder for other, smaller competitors to compete both in size and volumes of loans and overall rates,” he said.

Samuels signalled his ambitions for commercial lending earlier this year when he hired former Henderson UK property fund manager Ludo Mackenzie, who is overseeing the launch of a £200m commercial debt fund.

“Commercial is not nearly as liquid as residential and so those loans are larger and stay on the loan book longer. That’s the dynamic which will help that loan book reach parity with residential,” he added.