UK brokers have seen a boom
their factoring and invoice discounting business, while Lloyds
TSB and Bibby Financial Services also show increased activity
in the sector.
The trend towards asset-based lending suggests
businesses are seeking new and alternative forms of finance as
their traditional lines remain limited.
Go deeper with GlobalData
Lending by members of the Asset Based Finance
Association (ABFA) rose by 4% to £15.1 billion (€17.9bn) in the
third quarter of 2010, compared to the same period in 2009. The
ABFA figures mark growth for the third consecutive quarter.
National Association of Commercial Finance
Brokers (NACFB) figures show factoring and invoice discounting
business written by members has risen to just under £1bn in 2010,
up from £470m three years previously.
NACFB chief executive Adam Tyler said: “There
are three reasons for this. One is that brokers are diversifying
because of a lack of funders. They’re having to look for other
business for their customers. The second is that customers are
becoming more aware of other types of finance.”
The third reason is that training on factoring
and invoice discounting is also more widely available, Tyler said,
provided by bodies such as ABFA.
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By GlobalDataGrowth among companies using asset-based
lending stood at 11% in the third quarter, indicating they are
outperforming the economy.
The trend has also been mirrored at funders
such as Lloyds TSB Commercial Finance and Bibby Financial
Services.
Lloyds TSB has written two major deals,
including one worth up to £125 million with UK broadcaster ITV. The
TV channel has access to the funding over five years to coincide
with its transformation plan.
Terence Powell, director of business
development at Lloyds TSB Commercial Finance, who led the deal,
said: “In this uncertain economic climate, it is good corporate
governance to have these reserve facilities in place should they be
required.”
A second large deal saw Lloyds TSB Commercial
Finance provide £75 million to packaging supplier Chesapeake, in a
private equity-backed, cross-border transaction. American private
equity houses Irving Place Capital and Oaktree Capital Management,
which own Chesapeake, will use the funding to refinance loan
facilities.
Meanwhile, Liverpool-based invoice discounting
specialist Bibby Financial Services has appointed Holly French as
regional manager for the South West of Britain. French will work
from the company’s Bristol office to develop a network of
intermediary contacts and to build its client base in Somerset,
Devon and Cornwall.
