James Caan, a former star of the BBC’s Dragons’ Den, has launched a property-themed drive that mirrors the entrepreneurial business show in a bid to take advantage of the slump in bank lending to the sector.
Mr Caan will use his venture capital vehicle, Hamilton Bradshaw, to back 12 property start-ups with the aim of creating a multifaceted company with an equity value of about £500m.
The foray into property comes as banks become increasingly reluctant to lend to the sector amid regulatory changes. New rules being ushered in under Basel III – the third accord in a sequential improving of global banking regulation – will increase the amount of capital banks must hold against loans secured on buildings.
“The shake-up in the financing world means now is the perfect time to get into property,” said Mr Caan, who made his fortune setting up and selling recruitment companies.
“The market is dynamic right now and full of opportunities. It means there are a huge amount of people coming to market who have skills and talent, but can’t get money to start. That’s where we come in; we want to exploit that gap,” he added.
The investment model for Hamilton Bradshaw mirrors that used in Dragons’ Den, with Mr Caan taking an equity stake in the property businesses in exchange for providing start-up capital and his expertise. Once on board, each company will be based in Mr Caan’s Mayfair offices.
Hamilton Bradshaw has already put its financial muscle behind a two former investment bankers who wanted to set up a business specialising in brokering sharia-compliant property deals in the UK. The group is also in advanced negotiations to back a £250m fund, which will offer mezzanine finance for real estate transactions.
However, Mr Caan said each business he takes on will have different qualities and could range from estate agencies to retail property developers and interior design.
“The idea is to have 12 businesses which are all different, but all compliment each other and provide synergies. We will provide the infrastructure to each one and be able to realise the gains from having such a wide range of capabilities,” Mr Caan said.
“I am fortunate in the sense that because of the TV programme a lot of people know that I am a serious backer, so I see a lot of talent,” he added.
Property companies have struggled to secure bank lending during the past four years. The problem is worsening, however, as banks pull back from providing finance to all but the most established companies.
The proportion of banks willing to commit to lending to the sector has dropped to 43 per cent, according to the leading study into banks’ intentions by De Montfort University.