Mezzanine debt markets may be considered an unusual playground for a Perth-based start-up, but when you have the expertise and you want to live in Western Australia, innovation is required.
Mezzanine debt markets may be considered an unusual playground for a Perth-based start-up, but when you have the expertise and you want to live in Western Australia, innovation is required.
That is the combination of factors that led Peter Pynes to establish Subiaco-based Optimised Investments Ltd earlier this year after spending more than two decades on the east coast, mainly with Deutsche Bank in Sydney where he was director fixed income, for 12 years.
Drawn back to Perth for family reasons, he had a brief stint with Grange Securities before deciding to go it alone by starting his own business.
“The one thing about coming home was losing the challenge that the eastern states larger markets give you; this [the new business] is bridging the gap,” Mr Pynes told WA Business News.
Joining him as founding directors are former ING Investment Management fixed interest director Andrew Moylan and investment banker Tim Kestell.
Deacons partner and corporate lawyer Derek La Ferla is a recent addition to the board as chairman.
On the equity side, shareholders include Deutsche at around 10 per cent, management with 20 per cent, and a spread of high net worth investors including the Darwin-based Paspaley family’s Pearl Capital Investments Pty Ltd.
Mr Pynes said he hoped to double the current equity of $5 million with a new raising in the near future, which could be a pre-cursor to an IPO if the market conditions were right.
The strategy of Optimised is to use equity to leverage earnings from securitised or structured debt at a mezzanine level, which sits around the middle of the risk spectrum of debt available for wholesale purchase from banks or other institutions regulated by the Australian Prudential Regulatory Authority.
Optimised has a $50 million finance facility with Deutsche, and has built an asset base of $12 million in less than 12 months since it started. It also claims a maiden profit of more than $130,000 without a full-year of trading.
“I think we could be a $500 million business in three years. It is nice to have a goal but the reality is we are conscious of growing too fast,” Mr Pynes said.
He said the recent sub-prime drama being played out in the US had actually improved the market for investors in debt by increasing spreads.
Regulatory changes were pushing banks and bank-like institutions to move more debt off their own balance sheets, he said, providing new opportunities for groups like his.
Mr Pynes said Optimised's strategy was to avoid the most high-risk part of the market and seek debt that had been through the banking approvals process.
