The Intermediary speaks with Andrew Bloom about bringing the Masthaven brand back into the fold.
First, can you walk us through your history in this market since founding Masthaven?
I started Masthaven Finance when I was 29. I didn’t feel it was young at the time, but I was. I set up Masthaven while working in a full-time role as an investment manager in private equity, then trying to be an entrepreneur in the evenings and weekends.
I remember on one occasion taking a Masthaven-related call during the day sitting on the fire escape at work, and I thought, “this has gone far enough now, I need to quit my job and commit” – a scary thought when you have a self-employed, pregnant wife at home!
When I started the firm in 2005, there was no external investor, it was a bootstrapped startup, and I did a deal with my wife that I had one year, and if I wasn’t successful, I would have no option but to go back to my old boss with my tail between my legs and ask for my job back – fortunately I never had to do this.
The Global Financial Crisis came, and it was a difficult time, but we got through unscathed in the sense that nobody lost any money, apart from me.
Obviously, there were loans that went wrong, but in that two or three year period I learned more than any other time in my career, including when to finish properties off and sell them, when just to take the loss and move on. Because of that, as well as hard and detailed work, when the storm had passed, I was in a strong position.
What did your investment strategy look like in those early days?
I’ve always taken a contrarian view on investing. You don’t start building your big tower blocks in the peak of the market, because by the time they’re complete you risk being in a different part of the economic cycle.
If you can do the work and build something during a more difficult period, then you’re well-placed to take advantage when the water becomes calmer. So, in 2011 there was a real opportunity, because all the competition had taken a greater battering than me.
We had fantastic growth over the next five years, and during this period I spent two years obtaining a retail banking license for Masthaven. On the successful conclusion of this, I had the bittersweet moment off repaying hundreds of millions of pounds back to the mezzanine and senior debt funds.
In 2019, I sold my controlling stake to Värde Partners and did one more year as CEO and that was it, having done the entrepreneurial thing, with all the ups and downs, the financial crisis, as well as awards, successes and gaining a banking licence.
I must have been one of the few people in the UK whose only job in retail banking was as a CEO.
After that, I took various investment and non-exec positions, and then the opportunity came for me to purchase Spring Finance. There’s a sadness in Spring’s history following the death of the founder and his father, leaving two widows wanting to partially exit and find someone with the expertise to drive it forward.
I decided I wanted to take over as CEO – that I preferred it. I was too young, with too much energy and too many hard-earned experiences to take a step back.
Parallel to that, I was also always keeping an eye on Masthaven, with a view to buying what was left of it. In October 2024, I was successful and completed on my purchase.
Spring and Masthaven will be operating under the Masthaven Finance brand, what does that look like for the products and proposition?
We are very clear in our mission statement. Our focus is on our key products: first and second charge mortgages, buy-to-let (BTL) and owner-occupied – all specialist. It also includes a strong bridging and development proposition.
These are products for those people that need some assistance – they’ve either got something about the property or the borrower which needs a specialist solution. Examples of that might be Shared Ownership, Right to Buy, first-time buyers, self-employed or short lease properties.
People have come to me in the past and asked, ‘why should I use Masthaven and not HSBC or Barclays for my mortgage?’ My answer to them is simple: if you’re eligible and can meet their requirements, then 100% go with the high street for simple benefit of lower rates.
But if for any reason you fall outside of their lending criteria , then yes it will cost you slightly more, but you need bespoke underwriting which you can only get from a specialist lender.
You quite pointedly did not want the banking license when buying Masthaven – why is that?
There were huge numbers of policies written, product pricing models, affordability models, etcetera in the business. All of this has a lot of value as some of these financial models are very complex, and not having to reinvent the wheel is useful, so I bought all of that.
However, I didn’t want all of it. There are many challenges being an owner-managed bank. The Government, via the Financial Services Compensation Scheme (FSCS), has to guarantee all the savings accounts – billions of pounds. The Government must make certain that there are the necessary safeguards to protect them and taxpayers’ money. All of this makes sense.
However, if you want to own and grow a lending business long-term, a bank model is a hard one, because of the increased amount of capital which is needed as the bank grows.
If you want a fast-growing bank, you need to bring in sizeable external investors – as I did – but when you do so, they want a liquidity event. They want it to increase in value, and they want to sell. That’s what you sign up for.
I’ve run non-bank and bank lenders, and I have found that specialist lending fits much better into the non-bank environment.
Do you think the ‘bank’ label is perceived as better by people who aren’t aware of this dynamic?
Most borrowers do not care in the slightest. What they care about is product rate, speed, professionalism, and service, whether you are a bank, funded by retail savings or by non-bank funded via securitisation.
There are many lenders that have been incredibly successful, and which have no interest ever being a bank.
What is it about specialist lending that works for this model in particular?
Banks – quite rightly – have very formal, rigid, time-consuming processes to protect the taxpayer and savers’ money. That often makes the decision-making slow and cumbersome.
If someone calls up and says, ‘the person buying my house pulled out, and I’ve got to complete on my new property in eight days,’ – that’s hard to do with a retail bank funded model.
For specialist lending, you want innovative products you can get out to the market quickly, with a small number of senior people who have the authority to make quick, high-quality decisions, and an IT platform that can process that efficiently, with underwriters who are mandated to make decisions.
I’ve said to my current team that we won’t become a bank.
The other reason is that there is more shareholder value in non-banks. Many banks are currently trading at a discount to net assets. So if your bank is valued at 80% of net assets then if you make £50m of profits in a year, the value of your business will only increase by £40m!
What is Masthaven’s role within a changing market?
Our view is that we are putting in place products for the long term. We’re not thinking ‘how can we maximise profits in the short term to enhance value over the next three or four years?’, so that we can then sell our business. What we’re trying to achieve is strong long-term foundations.
An example of that is that we’ve spent a lot of time, money and resources putting in place a new IT platform for each of our products. The mortgage and secured loan platform go live at the end of next quarter. This provides a credit decision-making engine and application programming interfaces (APIs).
This long-term approach fits with the BTL market. If someone was looking to get into that market for a quick profit, I would tell them to reflect on their business plan. For us, it’s one product as part of a long-term diversified specialist approach.
Whenever we’re creating a product and reflecting on where we want to be, we ask ourselves: Where can we add to the market? Where do we feel there’s a demand? Where do we think that will change over the next five years?
Looking at secured loans, for example – that market will be significantly bigger in five years’ time than it is today. No one knows how much bigger, but we are confident in our commercial judgments, and we’re happy to make investments around that.
It’s much easier to go into an industry which is growing significantly than one which is staying the same size, and in which the way to grow is by capturing market share from your competition. You want to try to grow into a growing market, not one which is static or decreasing. That’s very much a part of our strategy.
The other thing we look at is that we want to lend into niche markets, because the industry is so big, which means even niche markets are very sizeable. You can have £1bn a year in lending and still only be a medium sized lender.
So, we have no interest in trying to compete with the high street. We want to compete in niches where they don’t want to be, because the market’s too small or too complex for them, or it’s not cost-effective.
You’ve chosen to trade under the Masthaven brand – what drove that?
On the business side, it is about brand awareness. If you spoke to 1,000 brokers and asked them whether they had heard of, interacted with or completed a loan with Masthaven, the answer would be very different if you asked the same question about Spring Finance. Masthaven’s brand awareness is significantly larger, particularly in areas we want to focus on.
Simply when it comes to search engines, there will be hundreds of articles on Masthaven – including The Financial Times, Sunday Times and The Telegraph, for example, as well as so many trade articles. Spring has come a very long way in the past couple of years since I bought it, but it’s hard to compare it with Masthaven’s history.
The other reason is that I think in business you need to be authentic. Masthaven is the company I set up in 2005 as a young entrepreneur, and it’s important to me, as well as to a number of the people in our leadership team. We spent significant amounts of time there, and so it’s about that authenticity and continuing the story of that brand, including the story of selling it and buying it back later at a fraction of the price.
Keeping the Masthaven brand means we can show that story, benefitting from it being a well-known brand, while doing things differently and returning it to a former position as one of the UK’s leading specialist lenders.
How are you balancing that sense of history with this new and different era?
We’re internally referring to this as Masthaven 2.0. There are certain things we did previously that we are incredibly proud of and absolutely want to replicate – the personalised service, the relationships with brokers, the laser focus on finding innovative products in order to meet borrowers’ niche requirements.
Then, there are certain things you learn over time. Our greater focus on technology is a good example – times change, broker requirements change, customer requirements change.
We’re absolutely committed to replicating the success of Masthaven 1.0, but there are certain things which we’re committed to doing differently and better.
With Masthaven 2.0, we’re trying to keep the good and meet the new generation. I started in 2005, and now it’s 2025. That’s a whole generation.
If you’re not moving forward, then you’re falling backwards. There’s no such thing in business as staying static. There will always be new companies pushing onwards and leaving you in their wake.
Anybody who’s run a business, even if that business has been successful, knows that that doesn’t mean that you did everything right, or that nothing can be improved.
One of the other things we’re changing is the way we deal with our people. I’m very keen for everyone to enjoy the journey of growing again into a £1bn-plus lender.
It’s very important to get the best out of people and to enjoy that journey. You can work hard and be diligent but also take pride and enjoyment from the results.
What are the developments people should be looking out for in these all-important initial months?
This is one of the most exciting things I’ve done in my career. It’s an emotional moment for me and others to have Masthaven back.
The first step is to reconnect with the brokers. We’ve sent out 1,000 cupcakes to brokers saying, ‘missing you’, and the next step really is about communication.
As part of that, you’ll see us very visibly and sizeably at mortgage shows, and much more prevalently in terms of advertising and brand awareness. There will be a whole host of things which we’re sponsoring and involved in over the coming months.
From the product side, we had a bridging and development product launching in February, and numerous other product launches in the pipeline.
The mortgage and secured loan product launch is coming out in June, together with the new IT system. We decided that it wasn’t the right time to do it now and then do another big change in June with the new IT platform.
Other changes include hiring an increased number of staff. There seem to be people joining every week! With significantly increased headcount, we’ll also be moving offices in the second half of the year.
Overall, we’re taking this combination of brands and trading as Masthaven as a catalyst to take everything up a level.
When you sell part of your business to a professional investment company, they expect certain things from you – fast growth. Now, it’s fully within my control. I’ve been very fortunate to be able to fund this without needing external investors or external working capital. I could never dream of that when I was a 29-year-old, when I was running the business for the first time.
That means we’re not under that pressure, and we can do it the right way – the way we want to do it, with no external pressures from large private equity companies going ‘go, go, go’ so they can get their return.
I enjoy this industry, I enjoy working with the people I work with, and I’ve already been approached once or twice by a sizeable bank looking to purchase a specialist lending arm. The answer is always ‘thank you, but no.’
The way we are doing it means you can do it right, you can make long-term decisions, not just focusing on short-term wins. I can put in place a product now that we think is going to take a couple of years to scale, and that’s OK.
