Pallas Capital is having a growth spurt. Having originated around $1.3bn in loan volumes last year, the private lender is aiming to close 2025 somewhere in the ballpark of $2.2bn to $2.4bn.
That is an ambitious rate of year-on-year growth, but Pallas Capital’s Group Executive of Origination, Jason Arnold, believes he has a winning strategy – he wants to nearly double volumes by having the most experienced staff on the case, and sufficient institutional funding to deploy.
A recently launched $185 million construction warehouse facility went some ways to securing the latter, while getting the right boots on the ground is a constantly evolving process.
Luckily, as a former broker on the frontlines of the industry, Arnold gained some invaluable insights into what does and doesn’t work.
When Arnold was working in the broker realm, the best banks to deal with “were those that had significant specific property experience”, he told MPA. This has directly informed his hiring strategy at Pallas.
“The team I’ve built is deliberately really experienced on the frontlines,” he said. “Some of the other smaller lenders, they’ll deploy quite a few BDMs that don’t have in-depth credit knowledge, and they’ll push those deals into credit, and credit will determine whether it’s a deal or not.
“That system doesn’t work with complex transactions or with astute property investors and developers.”
This emphasis on getting credit experts out where the action is “has been a really good system for us, and it’s really helped up to turbocharge growth”, said Arnold.
It is to Pallas’ benefit that some of the best talent in the credit space is leaving the banking majors to sniff out employment opportunities in the private sphere.
“The banks have lost some really good-caliber staff and we’ve been the beneficiary of that,” said Arnold. “Their credit knowledge is second to none. We’re fortunate to have a really good credit team, loan management team, product team, and strong parameters around our policy.”
It raises the question – if there really is an exodus of top-tier talent from the majors, why is this happening?
While redundancies and internal restructurings have played a part in this trend, Arnold also explained how dealmakers appreciate being able to flex their muscles more in the private lending space.
“The bank’s appetite in the property space, for example, has probably decreased… So if you’re a deal doer, then non-banks are probably doing more deals and more interesting transactions.”