Ex-Blackstone credit veteran targets Singapore mortgage market

FORMER Blackstone executive Kishore Moorjani has started a digital platform in Singapore selling pools of home loans to asset managers and financial firms seeking to bolster local currency fixed-income assets.

The company, known as LXA, is initially aiming to manage about US$250 million in mortgages, and plans to expand to other markets such as Hong Kong, South Korea and Taiwan over the next few years, Moorjani said. The firm has US$10 million in seed money from backers including New Enterprise Associates, Openspace Ventures and Singapore Economic Development Board Investment.

The digital platform will source mortgages through intermediaries such as advisers and mortgage brokers, and charge insurance companies and other buyers a management fee in return. Financial regulators have been bolstering reserve capital requirements for insurers to protect policyholders. These moves make residential mortgages more attractive because they are generally safe, collateralized and in local currency, said Moorjani, the chief executive officer of the new firm.

“The immense potential within the Asian private credit landscape lies in offering high grade, secure, locally denominated investment avenues to the substantial reservoirs of insurance and pension capital across the region,” he said.

Moorjani left Blackstone as senior managing director in 2021 after establishing a network of contacts at insurance companies and mortgage lenders during his time as the US alternative asset manager. Shawn Low, a former executive at US mortgage lender Better Home & Finance Holding, is also a founder and chief operating officer of the platform.

LXA hopes to grab a slice of Asia’s S$260 billion mortgage market, betting that regulatory changes on asset allocation will prompt insurers and other pools of capital to boost their exposure to domestic currency, and long-term assets to avoid excessive reliance on US dollar investments.

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Traditional lenders in Asia typically hold mortgages on their balance sheets and do not sell them to third-party investors through securitisation deals, leaving insurers and pension funds with little exposure to local currency mortgage products. LXA will create a channel for insurers, pension funds, sovereign funds and endowments to invest in these mortgages, Moorjani said.

Singapore was among the first in Asia to introduce a risk-based capital framework that requires insurers to reserve capital based on the risk level of their investments. Other markets in the region, including Hong Kong, Japan and Taiwan, recently proposed similar regimes to be implemented over the next three years, according to Deloitte.

Digital and non-bank institutions in the US are big players in mortgage lending, and consumer finance has been an increasingly popular asset class due to high returns and favourable capital treatment under solvency requirements. As mortgage lending has been historically dominated by retail banks in Asia, insurers have less direct exposure to these products and invest mainly through securitised loans.

Moorjani led an investment in LaTrobe Financial for Blackstone’s Tactical Opportunities Fund in 2017 and quadrupled the balance sheet lender into an A$12 billion (S$10.4 billion) asset manager.

“It was this transformation of LaTrobe that inspired building LXA as a tech-enabled mortgage asset management business,” he said. BLOOMBERG