Adelaide invests in mortgage manager

Adelaide Bank will buy a 10 per cent stake in MKM Capital, a non-bank lender specialising in non-conforming lending. A direct investment by Adelaide Bank (now part of Bendigo Bank) may be unusual for the lender.

MKM currently has no majority stakeholder, with managing directors Graham Mendelowitz and Mervyn Kark owning large portions of the company, along with a Swiss based entity, an investor since the company began operations in late 2004.

Mendelowitz said the deal with Adelaide Bank had not become more complicated due to the subsequent Bendigo Bank takeover, and he is pleased with the alliance, adding that the Adelaide connection "is of much greater operational benefit" than the IPO that was considered in the first half of 2007.

"Now with the Adelaide relationship, we are now going to have more focused and dedicated distribution channels, and we see that as being a significant enhancement on our volumes."

In regards to the higher cost of funding, Mendelowitz commented, "It hasn't been a major issue for us," but funders would not be disclosed.

MKM has its largest exposure in New South Wales and Victoria, with representation in Western Australia and Queensland, and a smaller exposure to South Australia.

"Western Australia is an area we are watching a little bit cautiously now; South Australia will be growth orientated and Queensland will be steady."

MKM specialises in loans including recovery, mitigation, bridging, second mortgages, no documentation and low documentation, and it is a full member of the Mortgage & Finance Association of Australia.