As SME Eurofinance looks forward to
celebrating its 21st birthday later this year, the
broker-turned-funder appears to be weathering the recession
bullishly – with an eye towards presenting a tidy package for
acquisition when larger appetites finally return to the UK leasing
market.
Whereas SME broker business volume for
2008 was largely unchanged from 2007’s total, it made increases to
its own-book lending which continued into 2009. While the company
wrote £2.2 million (€2.5 million) of its own business in the
entirety of 2008, it has already fattened its portfolio with £1.5
million of business in 2009’s first four months.
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To managing director Neil Hutton, it
seems that growth and exploration of new markets are still very
much viable options.
The company, which had 25 sales staff
spread throughout its 12 offices at the end of the second quarter
of 2007, has doubled its forward-facing staff roster over the last
two difficult years, and is now preparing to push the total forward
from 50 to 100.
“In tough times it is tempting to
downsize and save some overhead,” says Hutton, “but our experience
has been that new staff take a couple of years to become fully
competent with the market and systems, so we intend to keep our
existing infrastructure in place, poised for the upturn.”
Yet as well as being an increasingly
prolific introducer, SME Eurofinance also holds a lease book of
around £6 million (€6.8 million), developed from the previous
acquisitions of Commercial Asset Finance and Lester Finance. Deals
are funded largely through pension funds and block discounting
providers.
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By GlobalDataBut it is the combination of a small,
carefully maintained book and the company’s channels to market that
may “sweeten the deal” for a prospective buyer, says Hutton.
Aside from a general beefing up of the
sales operation, he has made a habit of acquiring specialist
business units focused on intense asset knowledge.
One of these, Soho Media Finance, has
a managing director whose former charge was a television studio –
meaning a pre-existing familiarity with suppliers, end users, asset
characteristics and (importantly) practical disposals options.
In Hutton’s opinion, having this
specialist knowledge at the front of his business not only weeds
out the best deals in a market massively undersupplied with
finance, but also increases the chances of securing funding for
them.
“We can tell a good story and offer an
excellent return on investments,” says Hutton, “but at the end of
the day we are a small limited company and not a massive licensed
deposit taker – therefore, we need to attract more entrepreneurial
investors.”
To use the example of Soho Media
Finance, this might mean a wealthy individual looking to invest the
proceeds of a media business sale, and therefore who is in a
position to better understand the performance of media assets than
the decision makers of a bank funder.
If SME Eurofinance can continue to use
its industry-specific expertise to draw financial blood out of the
stone of the UK investment market, it seems it has a very long list
of growth plans to fulfil. Needless to say, however, that is an
extremely significant “if”.
