Haydock Finance

Haydock Finance has grown and evolved significantly over the last two years. With a lending book that will exceed £500 million by the end of the year, we have been able to support a record level of SMEs, across a diverse range of industries. 

I lead Haydock’s structured finance division alongside Terry Hounsome. We have developed this bespoke finance solution into a multi-million pound channel, with an average deal size of £400,000. The aim of structured finance is to provide tailored solutions to opportunities that may not be inherently obvious via traditional financing structures. For this reason, deals tend to be of higher quantum and often involve multiple assets and stakeholders which adds a level of complexity. It can be difficult to define what type of deal will require a structured finance solution, but we assess and tailor a solution that not only relates to the customer’s immediate business needs, but also takes cognisance of how these needs evolve to support their future growth

Terry and I evaluate deals in terms of how they can be engineered so that a solution can be identified and reviewed in conjunction with Haydock’s credit team. Often described as the line between Sales and Credit, structured finance pulls together the borrower and the lender to deliver an outcome that suits both parties in the long term. We closely monitor the sales process and the credit function and essentially iron out any wrinkles to facilitate a solution and enable the transaction to navigate through the deal process as smoothly as possible. Terry and I take ownership of the deal from cradle to grave, with input and direction provided along the funding journey to both our internal and external stakeholders.

We look to gain insight and an understanding into the objective of the client and what they are seeking to achieve, moving then to how that transaction will benefit the business and how best it can be served via a funding proposition from Haydock. 

With no typical deal type and no sector constraints, structured finance can provide scope and opportunity across a multitude of businesses, ranging from production lines, large haulage operators, automotive manufacturers, P&M, contractors plant, fleet operators, to name but a few.

Throughout the pandemic, Terry and I have been working alongside SMEs whose cash flows have been significantly disrupted. When reviewing opportunities, a degree of objectivity needs to be employed as well as a strong conviction led approach. Earlier this year, one of our broker partners got in touch to see if we could assist a well-established London based cab company who were wishing to upgrade their diesel fleet to electric. With a halt on tourism and many people forced to work from home meant that the taxi industry was one of the most severely affected by Covid-19. 

By December 2020, a fifth of all London’s black cabs had been taken off the road with many cab drivers leaving the industry. Black cab rental firms had also been forced to hire fields and farmland around the edge of the city to store vehicles handed back by drivers. With the demand for black cabs diminishing, their values were drastically reduced too, making them a very difficult asset to value. It was also extremely challenging to predict their future as no one knew what impact Covid-19 would have on future tourism and working life.

Our approach to this deal was to work closely with the broker and Haydock’s asset management team to research and evaluate the possible market opportunities behind the current crisis to then provide sufficient evidence in their current and future values. 

Despite a large percentage of taxis being deregistered, we identified that due to the Transport for London’s licensing requirements to reduce emissions, when they came to register again, they would only be able to do so with an electric vehicle. We also found that journeys in black cabs had begun to steadily increase as passengers opted to travel alone instead of using public transport. With this evidence collected, Terry and I facilitated a meeting between the broker’s client and Haydock’s credit team so a sound understanding good be gained for the underwriting process.  By taking a more commercial approach, the vehicles valuations were supported, enabling the hire purchase facility to be approved to the value of £750k.