Bluestone Group

History

Bluestone Group was established in 2000 in Australia as a specialist residential mortgage lender. The business was founded by Alistair Jeffery, an investment banker who had worked at Goldman Sachs and Nomura Securities in London during the 1990s. The first loan was settled in December 2000, and in the following year, a modest A$50m residential loans were written.

Bluestone's first office was in Sydney's Chifley Tower. In 2001 the business moved to Clarence Street before relocating to its Sydney office to Kent Street and then to 101 Sussex Street. The business funded its early expansion with a series of private equity rounds. The first round of A$1.8m was completed in June 2000. The subscribers were primarily private investors. A further A$4m was raised in September 2001 from RMB Ventures, the Australian venture capital arm of First National Bank (South Africa). Crescent Capital and the Liberman Family invested further expansion funds in 2002, and ABN AMRO invested A$5m in 2005.

Bluestone's start-up funding was provided via a A$250m warehouse line provided by Nomura International, part of the Nomura Group. Nomura exited its funding line in 2003 by syndicating its warehouse line to Barclays.

2008 financial crisis

In early 2007, Bluestone employed over 200 staff and was originating around A$100m per month of residential, commercial and reverse mortgage business. The market for mortgage-backed securities (RMBS) changed radically in July 2007, the start of the Credit Crunch. From this point onwards, risk aversion in the debt capital markets increased sharply, and the RMBS market effectively shut in early 2008. RAMS, a large non-bank mortgage lender failed in August 2007, the first major casualty of the credit crunch in Australia. The business had been listed on the Australian Securities Exchange just eight weeks earlier at a market capitalisation of A$880m.

Bluestone was one of the last lenders to access the Australian and NZ debt capital markets without government support in late 2007 and early 2008, placing approximately A$650m of mortgage-backed bonds. The environment deteriorated again sharply in 2008 as the equity markets caught up with the scale of the turmoil in the structured credit markets, and started a major sell-off. Confidence in financial institutions of all types deteriorated throughout the year, and many banks struggled to fund themselves in the interbank markets, where borrowing rates rose sharply. Pressure built for financial institutions on multiple fronts, culminating in the bankruptcy of Lehman Brothers in September 2008.

Capital and asset management: 2009–14

In March 2009, Bluestone established its UK operation, opening an office in Cambridge as the group expanded its capital-management and loan-servicing activities.

In September 2011, Bluestone acquired Close Credit Management from Close Brothers for an undisclosed sum and renamed it Bluestone Credit Management. The Sheffield-based business managed more than 170,000 customer accounts; the acquisition approximately doubled the number of accounts managed by Bluestone and added about 165 employees to its European operations.

Later in 2011, Bluestone established its Irish business through the purchase, with Värde Partners, of a €350 million asset-finance portfolio from Bank of Scotland (Ireland). Bluestone initially concentrated on servicing the acquired portfolio and subsequently launched an Irish asset-finance lending business in late 2014.

On 26 February 2018, Bluestone agreed to sell its Australasian mortgage-lending and portfolio-servicing operations to an affiliate of Cerberus Capital Management. The transaction covered businesses in Australia, New Zealand and the Philippines, including the group's Manila operations, and Bluestone Group UK was to divest its entire interest in the Asia-Pacific business.

At the time of the announcement, the Australasian business had originated more than A$6 billion of loans, served over 37,000 customers and completed more than 24 securitisations in Australia. The consideration was not publicly disclosed. The acquisition was reported as completed in April 2018.

A portion of the sale proceeds were then used by Bluestone's parent company, Bluestone Consolidated Holdings, to fund the buy-back and cancellation of all shares held by LDC. The transaction resulted in the management team led by Alistair Jeffery acquiring a controlling stake in the company, with major institutional shareholder Macquarie Bank doubling its shareholding to 30%. Following completion, Bluestone Group had a team in Europe of 170 staff and net assets of over £20 million (A$35 million). Around the same time, Bluestone moved its head office to One Station Square, in the heart of Cambridge's construction and technology area.