Latest Asset-Based Lending statistics show promise
Asset-based lending (ABL) facilities dropped by 8% to £191.3
billion in the year ending 2009 (2008: about £207.7 billion),
according to the British Asset Based Finance Association (ABFA). At
the same time, Grant Thornton sees increasing competition among
lenders who wish to participate in ABL transactions. Moreover,
quarterly advances in the year ended 31 December 2009 showed
promise, with an upward trend noted in Q1 to Q4.
"Whilst 2009 for many businesses has been
tough given the severity of the recession and periods of reduced
liquidity in the financial markets the latest ABFA figures show
promise," commented Rupert Rawcliffe, corporate finance director at
Grant Thornton UK LLP.
In the quarter ended 31 December 2009, asset
based finance backed businesses generated sales of £50.3 billion,
an increase of over 10% from the quarter ended 31 March 2009 when
sales were £45.7 billion. Sales generated have been steadily
growing each quarter since this point.
"Given the lower regulatory capital
requirements of asset based lending when compared to traditional
overdraft lending, it is not surprising to see businesses
increasingly exploiting their balance sheets to access this form of
funding," explained Rawcliffe.
"When our client Gowrie Ltd, which trades as
B&S Healthcare, recently sought an ABL facility, they found
that the market was open and keen to engage. The Royal Bank of
Scotland Group provided in excess of £50 million in an asset-based
lending facility in connection with Gowrie's acquisition of the
assets of Colorama Pharmaceuticals," Rawcliffe pointed out.
"One of the key attractions for companies in
taking up ABL facilities, is the significant positive impact
the structure of such facilities can have on the cash flow of a
business. This was certainly a major consideration when Grant
Thornton advised Quattro Plant, a plant-hire services provider
which utilised its asset base to secure a £19 million ABL
facility from KBC Business Capital in December 2009," Grant
Thornton's Rawcliffe concluded.
ENDS
For further information please contact:
Alexander Wessendorff, Grant Thornton press
office, 020 7728 2048