Investec has told Leasing Life how it provided an extended block facility for Academy Leasing to acquire a £1.6m book of receivables.
On 6 May Academy Leasing acquired a book of receivables of around 1,000 finance leases with SME customers for vehicle fleet equipment.
1pm, owner of Academy Leasing, said the gross receivable value of the book was £2.03m with an effective yield of 17%. The acquisition allowed it and 1pm’s recently-acquired fellow-subsidiary, Bradgate Business Finance, the opportunity to cross-sell contract hire, lease and hire purchase of fleet and commercial vehicles into a new customer base.
Now Investec has revealed how it enabled the transaction to take place.
Osian Rees, head of block discounting and receivables finance at Investec, said: "This transaction demonstrates how a relationship bank, with an ability to provide flexible funding solutions together with an in depth knowledge and understanding of their clients’ needs, is able to execute complex transactions in a short period of time.
"Investec Asset Finance has had a long standing relationship with 1pm plc and its subsidiary, Academy Leasing. Academy advised Investec that it was seeking to acquire a lease portfolio within a strict two-week deadline and requested an increase in its block discounting facility with Investec to do so. At the same time, 1pm sought to increase their group’s aggregate funding limits with Investec, as well as establishing a new block discounting facility for another recently acquired 1pm subsidiary, Bradgate Business Finance Limited."
Rees said Investec fulfilled all requirements, increasing its block discounting facility limit for Academy to facilitate this portfolio acquisition, as well as allowing sufficient headroom within the facility for Academy to grow in the foreseeable future.
At the same time, he said Investec increased its aggregate facility limits for the 1pm Group by over 50%.
"The 1pm Group have been on a rapid growth trajectory for a number of years and this deal will help to further secure their position as a leader in their field.
"Whilst block discounting facilities have not traditionally been used for acquisitive purposes, all parties were confident that it would work in this instance and Investec look forward to further innovation in this and other areas, both with 1pm and other clients."