Industry Evolution Prompts Name Change - FDA Has Become ABFA

Secured Lender, The, Sep/Oct 2007 by Cove, Brian P

The trade association for invoice finance in the United Kingdom has changed its name to reflect the evolution of the industry and broadening of the funding offered to UK businesses by its members. The FDA became the ABFA (Asset Based Finance Association) on July 2, 2007, reflecting the growing number of companies that are turning to financial solutions that release the working capital tied up in organizational assets.

Beginning in 1976 as the Association of British Factors (ABF), the trade association has continually evolved throughout the years to meet the needs of its members and changes in the industry. In 1980, the association changed its name to the Association of British Factors and Discounters. The most recent iteration, the Factors and Discounters Association (FDA), was formed in 1996 following a merger with the Commercial Finance Association European Chapter.

Ted Ettershank, chairman of the ABFA and managing director of Lloyds TSB Commercial Finance, said, "Historically asset-based finance has been a small-to middle-market product, but as deal sizes in Europe continue to grow, our members are being asked to offer finance for large, corporate and private equity-backed transactions. As a result our industry now funds companies from start-ups to larger corporate deals on a pan-European and global stage and it is important that the association's name is reflective of this."

Kate Sharp, CEO of the ABFA, added, "ABFA members were advancing over £13 billion to UK companies at the end of March 2007, and a significant amount involved funding against assets other than invoices. Industry members are becoming increasingly flexible in their approach to structuring financial packages and funding is also available against stock, property and plant and machinery. They are even looking at funding against intangible assets such as brand and intellectual property."

"While invoice finance still forms the major part of our members' offering, the name change demonstrates how the industry has developed and reflects the wider range of funding solutions available. The change is also part of a wider strategy to educate businesses about ways of releasing working capital, which would otherwise be inaccessible."

The ABFA membership includes divisions and subsidiaries of all the major UK banks, foreign banks, major global industrial companies through to small owner-managed finance companies. The association exists to provide support to its members including providing on-line services, education and training, events, lobbying, public relations, industry research and industry news.

For more information on the ABFA, visit www.abfa.org.uk.

Recent ABL Deals Involving ABFA Members

* Burdale Financial Limited and Lloyds TSB Commercial Finance provided MFI Furniture Group with £150 million to replace MFI's existing revolving syndicate credit facility. The joint refinancing arrangement is one of the UK's largest asset-based lending packages to have ever been completed and was secured on debtors, stock and property.

* Barclays Sales Finance recently structured a stock finance facility for Vital Nut Co Ltd, an importer of edible nuts and dried fruit. One of the assets used to raise finance was the company's nuts, which secured £500,000 of funding.

* A management buy-out of wine wholesaler St Martin Vintners was backed by an assetbased lending package from Venture Finance, which included lending against the value of the wine.

* GE Commercial Finance supplied a £1.5 million finance package to Barum Potts management team to acquire the Devon-based pottery company from administration. The financing package consisted of invoice discounting, debtor stock, property and a cash flow solution.

ABL Activity is on the Rise in the UK

* Over 47,000 companies in the UK have accessed funding via an asset-based facility.

* The number of companies leveraging stock to raise finance has increased by 108 percent, while those utilising stock plus asset-based lending has grown by 250 percent.

* Funds advanced on plant and machinery between Q1 2006 and Q1 2007 has increased by 140 percent with £470 million currently advanced.

* FDA members led 50 syndicated deals in the quarter ending March 2007, advancing over 40 million.