Mergers & Acquisitions

Invigors EMEA and GrowCap to offer M&A advice to asset finance providers

Two specialist consulting firms, GrowCap and Invigors EMEA, have joined forces to bring a bespoke M&A advisory service to market.

Image: Chrispictures 

The "strategic alliance" aims to provide independent support for clients from pre-deal review and planning through to post-acquisition value realisation, the two firms said in a statement.

The proposition provides advice for both buy and sell parties covering funders, brokers and parent companies as well as specialist technology companies.

Invigors EMEA, which is part of The Alta Group, has experience advising on over 200 M&A transactions, has a network of buy/sell contacts in the asset and motor financing markets, according to the company press release.

The team effort is supplemented by GrowCap’s concentration in the UK market, notably in motor and SME lending markets and sector-relevant technology providers, the release said.

The collaboration following GrowCap’s June survey of UK asset and motor finance executives which identified a demand for advisory services, the two said in a statement.

Peter Hunt, managing director at GrowCap, said: “Recent market disruption has caused a number of firms to assess their futures, including the markets in which they wish to operate and businesses they wish to retain or grow.

We’ve spoken to a number of ambitious companies seeking to acquire good assets that will become dislodged. Working with the Invigors network we’re able to extend that reach for firms seeking to expand their European operations, and to access overseas buyers with a similar ambition

Ian Robertson, executive director of Invigors, said: “We see an increasing demand of customers looking for service-based outcomes.

"Our experience is that innovative companies seeking to move away from these legacy business models are looking to the M&A route as a means to making this transformation.

"In addition, we see many businesses seeking to drive additional scale and who see the current challenging economic conditions as an opportunity to buy high-quality assets at more realistic price points.

"Our M&A capabilities and our market experience and knowledge can help these ambitious companies deliver on their growth strategies.”

Close Brothers

Fitch said the fallout from the pandemic “has heightened risks to the group given its above-average exposure to SME lending through asset and invoice finance, to retail customers potentially affected by employment disruptions in motor finance, and to property lending that will suffer delays in completion and sales.”

It said the ratings of Close Brothers Group and Close Brothers Limited “reflect a strong record of performance through economic cycles, which has historically compensated their appetite for higher-risk lending” but added that in the current crisis, “we expect pressure on earnings through rising credit impairments and lower volumes.”

Investec Bank

Fitch said its action on Investec Bank plc (IBP) reflects the fallout from the pandemic crisis “represents a near-term risk to its ratings”.

It said: “The risks stem from the bank’s above-average exposure (as a proportion of gross loans) to sectors we consider as particularly vulnerable to disruption, such as small-ticket asset finance, aviation finance, corporate and acquisition finance.”

Metro Bank

The rating action taken by Fitch reflects heightened challenges to Metro Bank’s business model, earnings and ability to deliver its strategy, which the pandemic has added to. 

It said: “The coronavirus disruptions make execution on Metro Bank’s strategy more difficult in the near-term because of weaker prospects for growth, lower interest rates, and slower demand for loans. 

“The bank has been undergoing significant organisational changes, and its earnings were expected to be depressed by restructuring charges and a slowdown in lending. 

“The pandemic also poses an operational challenge for Metro Bank given its small size, staff capacity and management turnover.

“Metro Bank’s earnings are very weak (£53m operating loss in 2019, excluding the impairment of tangible and intangible assets). 

“Fitch expects that a return to profitability will be made more difficult by the coronavirus disruptions. Lower lending volumes, interest rates and transaction fees, and larger credit losses (from small amounts) will weigh on the 2020 loss.”

Paragon Bank

Fitch said Paragon had “a good record in maintaining sound asset quality and profitability, but we expect its businesses, particularly its SME and development finance business, but also buy-to-let (BTL) mortgage lending, to be at risk from asset non-performance and reduced profitability in the downturn. 

“We also believe that funding growth at Paragon Bank will be harder to achieve, given possible pressures on saving rates if unemployment increases, and that the bank will find it harder to execute its strategy.”

The Co-op Bank

Fitch said the downgrades of the Co-operative Bank “reflect our view that the economic disruption in the UK poses a material risk to the bank’s capitalisation and earnings, as well as to the stability of the business model and to management’s ability to execute on its strategy to grow revenue and return to profitability, relative to when we last reviewed the ratings.”

“The bank enters the economic downturn from a position of relative weakness given its structurally loss-making profile. The bank is vulnerable to greater-than-expected losses and continues to face challenges in its ability to execute its future strategic initiatives. 

“We also see a heightened risk of asset-quality deterioration, although this is partly mitigated by the secured nature of its loan book.

Virgin Money

Fitch the fallout from the pandemic “results in heightened risks to Virgin Money UK’s ratings since the bank enters the economic downturn from a position of relative weakness given its weak profitability compared with peers’ as the business continues to undergo restructuring following its 2018 merger.” 

“We have reflected the highly likely impact of the economic and financial market fallout from the pandemic in a weaker assessment of earnings relative to when we last reviewed the bank’s ratings. 

“We also see an increased likelihood of future asset-quality deterioration, particularly in SME lending and credit cards, as well as weaker capital generation,” the agency reported

Banks’ asset finance business operations  

  • Investec Bank has a subsidiary, Investec Asset Finance plc
  • CYBG-owned Virgin Money plc runs an asset finance division 
  • Close Brothers Group plc operates an asset finance division 
  • Metro Bank plc operates two subsidiaries: SME Asset Finance Limited and SME Invoice Finance Limited 
  • The Co-Operative Bank plc runs its leasing through various subsidiaries (Second, Third and Fourth Roodhill Leasing Limited)
  • Paragon Bank plc runs an asset finance division 


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