Former PM Paul Keating takes stake, joins board of commercial financier MaxCap
Former prime minister Paul Keating has joined leading commercial financier MaxCap as a stakeholder and board member, as it looks to fill the gap in commercial lending left by banks' tightening criteria.
MaxCap, which manages more than $3 billion of commercial real estate mortgages, claims to be leading the charge on super funds investing in lucrative commercial real estate lending.
MaxCap managing director and founding partner Wayne Lasky was cited by Fairfax Media as saying that Keating was providing strategic advice and had invested in the business.
Keating, who was PM from 1991 to 1996, recently said if a decision was taken to allow young Australians to access their superannuation to buy a house, it would “rob them” of savings later in life and called it an “irresponsible idea” in an opinion piece on Fairfax Media.
MaxCap group recently teamed up with Australia’s biggest industry super fund, Australian Super, to offer large $100 million-plus loans direct to developers.
Keating joined MaxCap late last year as a director.
The former PM's government was behind the 1992 creation of Australia's compulsory employer contribution scheme that now looks after $2 trillion in superannuation retirement savings.
"If a former head of state seeks to take an investment in a business, they do even more due diligence than institutional investors. Paul carefully guards his legacy, and rightfully so. Having done that work with us, he wanted to get a stake. We're happy to accommodate it," Lasky said.
"It's a big shot in the arm to the sector. When you've got the big instos [institutional investors] participating and you've got the former prime minister participating, you can see where it's moving to in the future."
MaxCap focuses on filling the gap in commercial lending left by the banks after the Australian Prudential Regulatory Authority tightened rules in the wake of the global financial crisis.
Lasky said Australia's commercial property lending was a $220 billion market, with more than 80 per cent of funding dominated by the big four banks.
APRA's imposition of stricter international Basel banking requirements will shrink the bank's market share and open up a $30 to $40 billion funding gap, he said.
"There's a structural dislocation which has been taking place since the crisis. If you've got the capital, there's pretty good lending to be done," Lasky said.
MaxCap placed $300 million in private funds through first mortgage lending over six months to December last year.
It also raised and placed $50 million in the first tranche of a $100 million first mortgage fund, with another raising expected in the next two months, he said.
A spokesman for Keating said the former PM believed it was the right time to invest into MaxCap's platform which was well placed to take advantage of the structural opportunity as the banks were obliged to withdraw from commercial funding due to Basel III and IV guidelines.
The MaxCap website is available here.
