Judo Capital set to step out of the shadows

Aspiring small business bank Judo Capital expects to receive a deposit-taking licence in coming weeks.

Judo, which has written loans to business of almost $200m, has a pipeline of lending of about $500m.

Aspiring small business bank Judo Capital expects to receive a deposit-taking licence in coming weeks after it secured a new debt facility from Goldman Sachs and loans in its pipeline near $500 million.

Judo tapped Goldman for a $100m debt facility, an agreement which takes its total debt funding to $700m. Other debt facilities were sourced from Credit Suisse, a regional bank and a specialist lender as Judo seeks to ramp up and become a challenger to larger banks.

The small and medium business-lending market is worth about $300 billion, although debate has raged about a funding gap in the market of about $83bn.

“The government has had to step in and address a market failure,” Judo’s joint chief Joseph Healy said, referring to the federal government’s $2bn securitisation fund and plans for a private equity-style growth fund to help alleviate access to credit issues for small business.

He added that the banks “had allowed” the market dysfunction to occur.

Mr Healy, a former National Australia Bank executive, said Judo was on track with growth plans and its banking licence negotiations were “well advanced”. He expects word from the Australian Prudential Regulation Authority in the next two to three weeks.

Mr Healy also said Judo, which has written loans to business of almost $200m, had a pipeline of lending of about $500m, and was expanding into markets including Sydney and Brisbane.

“We are loosening the taps a little,” Mr Healy said, adding that followed a more measured approach after its launch in March last year. If growth continues, Judo expects to wade into the securitisation market as early as 2021.

Judo counts former treasury secretary John Fraser as a non-executive director.

The company is, however, facing established players and other aspiring small banks and fintechs in the sector.

Judo raised $140m of equity last year.