Even commercial specialists need to diversify, as Jamie Giles has found. Having led Westpac Commercial Banking’s healthcare division and later specialised in healthcare at Green Finance Group, healthcare provided an obvious starting point for his Astute Financial brokerage in Springhill, Queensland. “When we first started working in the business it was 100% healthcare,” Giles explains. “We’ve taken a view over the last 12 months to diversify; to still be an authority within the industry of healthcare but also in other areas. We’ve branched out into retail, supermarkets and property in a big way.”
Healthcare now makes up 50% of Giles’ business, and cash flow finance is central to what the brokerage provides. He has established relationships with large groups, up to 80 businesses, and conducts an annual or half-yearly review of their facilities. “They engage us so we can give them some feedback before we present it to the bank … we really try to be that trusted adviser/finance specialist within their business.” While Astute charges fees, Giles is happy to advise not-yet-ready borrowers on how they can get to the point of achieving their financial goals.
Changing bank appetites
“I don’t think [the banks] are less willing to lend,” Giles says. “It’s just the hurdles and benchmarks they want to achieve have certainly grown.” He finds that lenders are looking at applications in far more detail, and while they might previously have been required to hit four performance benchmarks, now that number is 10. “For the right client there’s always a transaction available,” Giles explains. “Are they willing to take a chance on what doesn’t fit into their model? That’s less apparent out there in the market.”
Looking elsewhere for finance
With Giles still able to make the right deal work for lenders, he relies mainly on the majors for finance. “We also do a bit of third-tier lending for fit-outs and equipment and that sort of thing,” he adds.
Outlook for 2017/18
While Giles’ diversified business has shielded him from some of the sharpest lender changes – such as those hitting developers – he can see conditions getting tougher. “I certainly see the banks continuing to tighten; I’m certainly seeing the banks continuing to increase rates because of their provisioning for capital funds. I certainly see the next 12 months being the most challenging in the past five years, that’s fair to say; but still, if you have a good core business, I still think the banks will be willing to lend.”