Bridge Capital Management Co Ltd aims to be a new funding source for small and medium-sized enterprises (SMEs) in the Thai market as it foresees greater opportunities amid sluggish SME loan growth in the banking sector.
The company plans to finance real estate-backed SME loans with an investment participation feature, commonly known as secured private credit, the first such product offered in Thailand.
For SME loans, the company allows private investors to jointly provide funding to the borrower, said managing director Titiwat Kuvijitsuwan.
Bridge Capital launched the new product in the local market yesterday with the first loan amounting to 40 billion baht, seeking investors to join the deal.
Based on Commerce Ministry regulations, the company is allowed to charge a maximum interest rate for the loan product of 15% per year.
Mr Titiwat said the company set a credit line for the loan product of 10-50 million baht per customer with a short-term loan maturity of 1-2 years. The loan-to-value ratio is up to 50% of collateral value.
For loan approval, the company mainly focuses on high-quality real estate collateral in prime locations, including vacant land, commercial buildings, townhouses and condominiums.
With expertise in the real estate industry, the company focuses on loan collateral rather than the financial statements of SMEs for loan approval.
Given the short-term loan period, the company can approve an application within two weeks compared with a few months for banks.
Moreover, the majority of banks have slowed SME loan growth because of higher risks for this customer segment.
"The company has advantages that provide greater opportunities to grow the business," he said.
"There are a lot of small businesses in need of speedy funding to expand, particularly at this opportune time."
For interested investors, the company requires an investment duration of 1-5 years with minimum investment of 5 million baht each.
Investors can expect a return on the investment in the range of 5-8% per year, said Mr Titiwat.
He said the company expects total loan growth to reach 250 million baht in the first year of business.
In addition, Bridge Capital aims to gain a market share of 3-5% of the private debt business within five years, said Mr Titiwat.
The total private debt value is currently 300 billion baht.
Bridge Capital plans to increase its registered capital from 25 million baht to 100 million this year, he said.
The company has two major shareholders: Capstone Asset Co Ltd, a prominent real estate developer, and Capital Link Credit Foncier Co Ltd.
William Heinecke, founder of Minor International Plc, one of the largest hospitality and restaurant companies in Asia-Pacific, is expected to join as a strategic investor.