Avenue Bank – the brainchild of former Creditor Watch founders Colin Porter and Dale Hurley – is expecting to add two new strategic investors to its register after securing a restricted banking licence from APRA on Tuesday.
The Sydney-based company is the first business-focused lender to secure a RADI licence.
Liberty Financial and Nightingale Partners are currently the main sources of capital for the startup, but Porter told Banking Day that could soon change.
“We have another two strategic investors in the mix,” he said.
According to ASIC filings, Avenue’s operating arm has paid up capital of A$30 million while a group holding company has subscribed capital of $29 million.
Avenue is being positioned as a specialist provider of business loans of up to $250,000 - a market segment that Porter says is not a primary target for Australia’s other start-up business bank, Judo.
“They are very much a traditional bank,” Porter said.
“The loans they’re providing are a lot higher than we will be providing – I think Judo targets large SMEs.”
Avenue is not planning to market any loan or deposit products to the public until it secures a full banking licence.
Porter said the company was hoping to obtain full authority from APRA by the end of May next year.
“We are going to hold off a public launch of our products until we get a full ADI licence,” he said.
“We will, however, be trialling loan and deposit products with some parties but that will be purely for testing purposes.”
Avenue had been expected to secure a banking authority earlier but its application stalled as a result of APRA’s temporary freeze on issuing new licences after the Covid-19 pandemic reached Australia last year.
Porter acknowledged that the licensing delay had been a source of frustration.
“It has been a three-year journey,” he said.
“With other companies I’ve founded you start the business from day one but that’s not the way it happens in banking.
“The Covid freeze has certainly been frustrating for me as an entrepreneur.”
Porter stepped away as chief executive of the company in July last year to make way for former CBA executive George Confos.