In that time Close Brothers Asset Finance have become expert in fields well beyond standard funding, including mergers and acquisitions, industry research and facilitating bespoke finance deals.
We spoke with Roger Aust, Managing Director of Close Brothers Asset Finance’s Print team. With over 40 years’ experience in the sector, he is particularly well placed to shed light on various aspects of Print funding.
How are Close Brothers Asset Finance breaking the mould when it comes to finance solutions for the printing market?
There are numerous ways we break the mould, but maybe not in the ways you might expect. For example, we only employ sector experts – members of our Print team won’t work for any of our other industry teams, like manufacturing or transport.
The truth is most business owners are fully aware of the various funding sources available to them and our own research confirms that, but It’s not always about finding an alternative ‘way’ to access finance but instead an alternative ‘approach’.
Speaking from the Close Brothers Asset Finance perspective, we spend time engaging with our customers to find meaningful ways to help them. Sometimes a standard 10% deposit over 60 months isn’t always the best solution - by taking time to understand our customers and their business we try to take the pressure away from any transaction so that they can get on and run their company.
Creating bespoke solutions for our customers is what we’re good at and we know our customers appreciate this.
In a sector where margin is everything, what impact do Close Brothers Asset Finance have on business transformation and increased profit for your customers?
We are known for our ability to understand the workings of individual businesses and use this understanding to provide the correct finance over the correct period, maximising the return on any potential investment. This can be for new equipment; used equipment; M&A and to assist cashflow when new projects are in the offing.
B understanding the industries we serve, we’re able to release equity and create worth from assets that may have belonged to a company for many years. We appreciate the true value that exist in assets – new and old – and appreciate the wealth they can – and have - created for a business. This inherent value can be turned into hard cash for new projects, future investments and growth, leading to job creation and security.
Close Brothers Asset Finance are a one-stop shop finance provider – what are the different options you can provide?
We offer all the traditional types finance, including Hire Purchase and Leasing; however, in conjunction with certain suppliers we are also able to offer Consumable Agreements, which - if structured properly - can help a customer match their equipment purchase repayments to cashflow and the consumables they use with it.
Common examples of asset finance products:
- Hire Purchase (HP) allows the customer to buy the equipment on credit. The finance company purchases the asset on behalf of the customer and owns the asset until the final instalment is paid, at which point the customer is given the option to buy it
- Refinancing (Capital Release): The finance company purchases the asset and finances it back to you. Repayments are calculated in line with the income stream that will be generated by the asset; at the end of the refinance term, you own the asset
- Finance Lease: The full value of the equipment is repaid to the finance company, plus interest, over the lease period. At the end of the term, the company can choose to:
- continue to use the asset by entering a secondary rental period
- sell the asset and keep a portion of the income from the sale
- return it
- Operating Lease: Similar to a Finance Lease, an Operating Lease allows you to rent the asset from us while you need it. The key difference between the two is that an Operating Lease is only for part of the asset’s useful life. This means you pay a reduced rental because the cost is based on the difference between the asset’s original purchase price and its residual value at the end of the agreement.
Some would view exploring finance options increased risk for their business, Close Brothers have strong reputation in the market as a reliable finance partner, can you help de-bunk the risk myth?
Every successful business takes out finance at some point, primarily to protect their cash flow, which is a sensible thing to do. Our research tells us Print & Packaging firms are confident about being able to access the funds they need in the coming 12 months and not many have been declined finance, so it doesn’t appear as if there are that many challenges standing in their way at this moment in the economic cycle.
But therein lies a key challenge for business owners – when we inevitably move onto the next cycle how many firms are confident their funding partner will still be there for them? We know businesses don’t go bad overnight and we are there for the long-term, not only when times are good.
What are the dangers of the alternative options when compared with the conventional lending market?
We don’t see any dangers presenting themselves, only opportunities. Traditionally, alternative funders lend against assets and not the whole business and as such the ‘dangers’ are reduced. Most people would perceive lending dangers as putting the whole business at risk (‘all the eggs in one basket’). The great benefit of alternative funding options is that it can be asset specific, tailored to future production and very flexible in the event there is a change of direction in the business.
What are the typical print assets you finance?
The beauty of asset finance is its flexibility – it can be used to fund almost any asset, including:
- Printing equipment
- Print finishing equipment
- Allied trade equipment
- Cut sheet toner machines
- Inkjet press
- Digital finishing
- Printing press
- Cutting tables
- Large format printing equipment
There is very little that we won’t consider financing
Close Brothers are not limited to financing assets – what can you provide in terms of M&A?
The Print team at Close Brothers Asset Finance has a long history of working with businesses on acquisitions, divestments, MBOs, start-ups and even retirements.
A recent example was when Close Brothers Asset Finance played a key role in Glasgow-based Bell & Bain’s management buy-out of J Thompson Colour Printers. The resulting combined company is now the largest production unit in their sector.
Between them, Bell & Bain and J Thomson have been trading for an incredible 270 years and are both, in their own rights, highly successful. Because of this, we had no hesitation in providing them with the asset-backed facility they needed to complete the deal.
We also recently provided start-up funding for Transcend Packaging, a Wales-based packaging firm focused on sustainable paper-based packaging – including straws – digital printing and biodegradable paper cups.
The firm has already seen impressive growth in only a short space of time, with deals signed to supply paper straws to some of the UK’s leading fast food and coffee chains, including McDonald’s, along with major distribution companies servicing the hospitality sector.
Close Brothers Asset Finance has committed to a number of Hire Purchase agreements for multiple assets over a time period up to 84 months, including a KBA printing press that enables printing onto various substrates, and the paper straw manufacturing machines.
What can the industry expect from Close Brothers in the next 12 – 18 months?
What you can expect is consistency – we will continue to lend through the cycle with no surprises, just a continued focus on providing the best possible service to our customers
Close Brothers has a well-documented history of lending through all economic cycles and it’s something we pride ourselves on. We know that profitable and effectively-run businesses don’t become bad overnight, but they are instead the victims of decisions taken without their input, which is something we would never do.
We were one of the few lenders not to exit the market, and were the only financial institution that experienced steep levels of growth. Close Brothers could only do this because of the strong relationships it has with its customers, who know they can expect consistency, at all levels.