Arvind Raghunathan, co-founder of US financing platform Roc360, provides purpose-built loans to professional operators in the residential property sector. The company targets property developers, trade contractors, buy-and-hold landlords and investors who acquire, modernise or construct single-family homes. Retail consumers are explicitly excluded from the lending target group.
Since its foundation 13 years ago, Roc360 has provided approximately $22 billion in financing volume across around 50,000 residential bridging loans. The platform is not limited to pure loan origination, but also covers special servicing, valuations, construction inspections and insurance services for borrowers.
From Wall Street arbitrage trading to a real estate niche
Raghunathan, who holds a doctorate in mathematics and computer science and taught as a professor at New York University, headed global arbitrage trading at Deutsche Bank in the early 2000s. Following the global financial crisis, he left the bank in 2009 together with his colleagues Max Stavinky and Erik Abrovovic. The three partners originally founded Roc360 as a hedge fund for arbitrage and long-short equity strategies. After returns lagged behind expectations until 2013, the founders returned the raised capital of more than $1 billion in full to investors.
Entry into the current business model followed shortly thereafter through contact with a local lender issuing $5 million to $6 million in loans annually. The founders initially invested $30 million of their own capital. Raghunathan identified that the highly fragmented market for commercial residential loans lacked both institutional capital and modern technological infrastructure.
Integrated platform and responses to the housing shortage
To minimise transaction risks and accelerate processes, Roc360 gradually built up dedicated business units for ancillary services. Through its asset management subsidiary Roc360 Advisors, the company raises capital from sovereign wealth funds and other institutional investors, which serves as the liquidity base for lending.
- —Direct origination of bridge loans for developers and renovators of single-family homes
- —Proprietary property and casualty insurance solutions for borrowers
- —Mandatory construction progress inspections prior to the disbursement of further tranches
- —Capital raising via sovereign wealth funds through the subsidiary Roc360 Advisors
Despite higher borrowing rates, the company is recording demand growth of nearly 50 per cent year-on-year. Raghunathan attributes this increase to the structural shortfall of modern housing in the United States. Many projects involve mid-twentieth-century houses in the suburbs of major US cities, primarily in the north-east of the country. By refurbishing around 20,000 properties per year, affordable housing is created for working families.
