At the year end to June 30 2007, Quartz Finance hit a target of
£75m worth of capital financed. At the same time, revenues totalled
£1.1m and distributable pre-tax profit increased to £1m. This was
achieved from a standing start in 2004 and is heading toward, what
the company predicts will be, a capital-financed target of £100m by
2008.

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Quartz Finance, a technology intermediary and packager, was
formed by three former Dresdner Kleinwort Wasserstein (DrKW) staff
– Graham Wall, Kevin Mears and Andrew Cameron. All were experienced
in funding technology assets in the corporate and public
sectors.

The catalyst for forming the new business was the
disillusionment of the trio after Dresdner’s technology business
was acquired byBarclays Asset Finance in December 2002.

Wall summarises their business philosophy: “Many funders have
become prescriptive and bureaucratic in their approach to new
business. Their attitude is ‘this is the way we will do business
with you’ rather than working to develop a mutually beneficial
relationship. We were determined to work long-term in structuring
finance solutions to fit customers’ requirements.”

Fujitsu

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An early win was a vendor partnership with Fujitsu Services, a
global top-three technology services company, which was achieved
via a formal tender. The following year, another sizeable win was
Kingston Communications, which, under its Affiniti brand, provides
telephone and data communications to public bodies and large
corporates.

Mears says Quartz Finance’s deals range from £100,000 to around
£30m, with an average of £1m. “Obtaining sources of funding was not
our biggest challenge in setting up,” he says. “We already had a
sound reputation in the industry and were trusted by lenders. We
have a core of three funding sources, but a total of 10 we can call
on if required.”

The company has six directors – three of whom are dedicated to
the Fujitsu Services account. In total, Quartz Finance has 17
revenue-generating accounts in the IT, software, services and
telecoms vendor sectors. The company also acts as a consultant for
established vendor programmes and provides end-user consultancy to
major lessees.

Deal structuring

Mears says many deals are structurally complex and are
receivables-based rather than tax-based. “Most customers are blue
chip,” he adds, “and contracts typically consist of an
assignment-of-payments structure. The flexibility of this approach
allows Quartz Finance to address a wide range of customer and
supplier requirements. We have also structured several deals in
continental Europe, including Belgium, Germany, Switzerland,
Portugal, Spain, Norway, Finland and Sweden.”

In mid-2007, the company established a partnership with US Bank,
part of US Bancorp, which, with $228bn in assets, is the
sixth-largest commercial bank in the US. The idea is for US Bank to
utilise Quartz Finance’s expertise as a conduit into Europe.

Mears explains: “US Bank runs a variety of vendor relationships
in the US – including in the healthcare sector – and this will give
us an opportunity to replicate in Europe what we have established
in the UK.”

Energy deals

The company has also diversified into the renewable energy and
energy-efficiency sectors. A recent deal includes a £100,000
intelligent-metering project for the public sector in the North
West of England. “Deals such as these,” Wall says, “can be self
financing because, in some cases, the energy-saving payback can be
achieved in as short a period as 24 months.

“In addition, funding renewable energy assets is not dependant
upon residual values, but rather on cashflow and budget management
for the customer.”

For the future, Wall and Mears are bullish and expansionist in
outlook. “We can grow organically at 25 per cent to 30 per cent, as
we have over the past three years,” Wall says, “or we can team up
with like-minded organisations that have a similar business model
to ours. This would accelerate our growth plans.”

The directors would also welcome discussions with financing
professionals “currently working in a larger organisation, who
share our customer focus and would like to be part of our
continuing success”.