Alex Bank plots second, late 2023 capital raising

afr.com:

Upstart financial services challenger Alex Bank is set to go cap in hand to investors for a<a href=«https://www.google.com/url?sa=t&rct=j&q&esrc=» https:> second multi-million dollar capital

raising in under a year.

After calling in its advisors from Clinton Capital Partners and Henslow for a $20 million raising in May, Alex Bank chief Simon Beitz told The Australian Financial Review the company would look for funds “towards the end of the year” to meet capital requirements and push lending growth.

Alex Bank CEO Simon Beitz said “we will need to continue to raise Tier 1 capital”. Michael Quelch

The Brisbane-based group, which only got a banking licence last December, is only engaged in personal lending for now rather than mortgages. Still, it had lent some $74 million to customers by the end of June. On the deposit side, Alex Bank only offers high-interest saving accounts or term deposits.

Mr Beitz said further growth was on the agenda, but it needed the capital to power this. Alex currently boasts around 2500 customers, a number it has been building since it received its unrestricted banking license.

“Banks are capital intensive and the way you grow a bank is through Tier 1 capital. So, we will need to continue to raise Tier 1 capital as all lenders do, and we’ll continue to do that,” Mr Beitz said on Monday.

Tier 1 capital is the core equity asset of a bank, composed largely of its cash, retained earnings and stock. It has a regulatory component too – an Australian lender’s common Tier 1 capital must equal 4.5 per cent of the value of its loans to ensure it can withstand any big financial shocks.

“We are yet to determine the size [of the raising], and it is purely to grow Tier 1 capital. It is not required for any