UK lessor Capital Solutions Group
has seen growth in its business volume this year, but is taking
several precautions including looking for additional funding lines
to protect itself from the credit crunch.
The Petts Wood-based company has
reported business volumes of about £34 million (€40 million) in the
last trading period ended in June, up 30 percent year-on-year, and
expects growth to reach £45 million for the whole year.
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But David Jackson, the company’s MD,
said that despite the growth and the positive forecast, the past
two months showed signs that CSG was heading towards a more
“cautious” approach to business.
He said: “Until a couple of months ago
we hadn’t seen any impact of the crisis. There was then a general
tightening of underwriting criteria, but business levels didn’t
seem to be reducing, and the ability to source funds in the market
was still fairly flexible.”
But in the past two months,
contraction of the market and liquidity issues have impacted on the
asset finance industry, and Jackson said CSG Lease has begun to
actively look for additional funding lines.
“This is more as a precaution than as
an actual need at the moment, because we still feel comfortable
with the funding we have and our banking partners seem to be
well-capitalised and able to support us,” he said.
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By GlobalDataCSG has not experienced any increase
in default rates and only one failure in the past 12 months,
Jackson claimed. This is because of its “careful way of selecting”
its customers, going after larger SMEs and those thought to have
more financial strength, he added.
The company is a medium-ticket lessor
providing finance for the software-asset sector, primarily
financing software, IT and telecoms, with average transactions of
£120,000.
It has appeared in the Sunday Times
Fast Track 100 listings for the past two years and has recently
been appointed as the UK financing partner to the MSP Alliance, an
American-based trade organisation, with 1,000 members in
Britain.
Jackson said that despite the
financial crisis, he expected to find more opportunities within the
sector.
“For lessors, there are great
opportunities, because with the shrinking of availability of funds,
certain lenders are shutting their doors altogether, which has left
a huge amount of very credit-worthy clients suddenly scrabbling
around trying to find funding and, on the vendor side, a number of
large vendors who thought they had secure funding behind them, only
to find that those parties can’t perform anymore,” he
explained.
“As long as there is a sustainable
amount of funding behind us, which is an issue that any company
has, I think that there is a huge opportunity to be capitalised,”
he concluded.
