Pre-hire facility and foreign exchange

Our very own Nick was privilaged to be asked by Investec Asset Finance to be one of the Key Note Speakers at their recent National Sales Conference at Heythrop Park in Oxfordshire.

Nick completed a £2m deal with Muntons plc for a new Anaerobic Digestion Plant, using Investec Asset Finance and their Treasury Team, and so complex and unusual was the transaction that Nick was asked to run through it in detail to the 200 Brokers present at the conference. Afterwards, Investec issued the following press release…

Investec Asset Finance recently provided a £2m asset finance facility for Muntons plc, one of the UK’s leading malt and malted ingredients manufacturers.

The facility formed part of a £5m project to install an anaerobic digestion plant, allowing Muntons to avoid the additional and substantial cost of storing or removing liquid waste material. Instead Muntons would be able to process their own waste on-site providing the additional benefits of a new income stream through the production of electricity and a bio-fertiliser product.

Initially faced with some scepticism from funders about the project, Muntons appointed Nick Flower, a Director of B2B Cashflow Solutions Ltd, to source a funder who had the best financing solution for this complex deal.

The facility Investec provided covered hard assets, such as the tank and plant hardware, with the remainder of the project’s soft costs and working capital costs funded by Munton’s incumbent banks.

Some of the equipment was imported from a Belgian supplier and paid in Euros, bringing an element of currency risk into the transaction. Investec utilised its Corporate Treasury team to discuss possible hedging strategies with Muntons, allowing the client to have a better understanding of the benefits and risk of various products. Muntons have subsequently appointed Investec Corporate Treasury for at least one large forex deal as a result of the exceptional service they received.

Investec provided a pre-hire facility which allowed Muntons to make regular payments before the assets were fully operational, so that they were able to lower their outstanding capital, total interest costs and smooth the deal over more payments, helping to manage their cash flow.

Nick Flower, B2B Cashflow Solutions said: “Our partnership with Investec worked very effectively, with Tom Fordyce and his City-based team working tirelessly to meet the quick turnaround that this deal required, with a solution that met all the requirements that Muntons had. As a result, Muntons were particularly pleased with the service they received, in particular how Investec drew in their foreign exchange team to advise on the currency risk associated with the overseas asset purchase. I have a great relationship with the team and look forward to continuing to work with them closely while offering additional products to my clients.”

Martin Harries, Investec Asset Finance said: “Complex deals like this need to be placed with the most appropriate funder. Due to our strong relationships with the rest of the bank we are able to structure deals like this while utilising other Investec products such as Foreign Exchange to ensure the best outcome for the customer.”

27th NOV