Good evening,

Here’s a sneak peek into the world of start-up private debt lending.

One of Metric’s equity investments, WA prop-tech start-up RealtyAssist, found itself in need of an emergency cash injection over the Christmas break. According to documents lodged with the corporate regulator, the company spent 2023 loading up with short-term debt to support its growth and plug cash flow issues.

Founded by former real estate agent Sam Rettke, RealtyAssist develops lending products across the property sales cycle, partnering with real estate agents to give their clients access to funds to cover the cost of vendor paid advertising – the upfront cost of listing a property – which is paid back with interest when the property is sold. In its four short years, the company has seen immense growth, requiring ongoing access to equity and debt to fund its loan book and working capital.

Several of its loans will mature in the first six months of 2024, including a $13.52 million loan from MCP Credit Trust dated January 19. Shareholders were told RealtyAssist undertook an urgent $38.7 million placement via lead arranger Ad Astra Capital Markets, and proposed a buyback of up to $11.9 million, holding the door open for those looking to exit. This was a pretty chunky raise in the context of 2023, with start-up funding plummeting two-thirds from its peak. RAIHC, an entity controlled by Metrics, pledged to participate in the placement for $14.2 million – or 36.7 per cent of the placement – and cover any shortfall.

Before the raise, RAIHC owned 36.7 per cent of RealtyAssist and had written the company several loans. In May, RAIHC also entered into negotiations with RealtyAssist to acquire 100 per cent of the shares and securities convertible into shares. Discussions ended in September “before any material progress was made”.

Ad Astra announced the placement was completed in early February. With the raise falling over the Christmas break, Street Talk would be surprised if there wasn’t a substantial shortfall for RAIHC to rake up.

2023 was also peppered with senior people changes. Rettke resigned in November “on mutually agreeable terms”. He intends to cash out at the buyback, shareholders were told. Chairman and co-founder Peter Wall chose not to seek re-election at the November AGM. Metrics managing partners were elected to the board – Andrew Lockhart as chair and Andrew Tremain as director.

RealtyAssist is still in start-up phase, but for onlookers, the episode shows just how convoluted start-up investing/lending can get. Metrics has gone from an equity investor to an owner/lender to underwriting a capital raise to meet its own loan and now has control of a company without a chief executive. Still, sources told Street Talk RealtyAssist is in a better position with non-bank powerhouse Metrics at the helm.

Read the full story tomorrow and more on the Street Talk page.

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