Overseas asset purchasing

Case study

Stack of flattened cardboard boxes

 

Overseas asset purchasing can help propel businesses by promoting business growth through tangible acquisitions. Discover how Investec facilitated stage payments and foreign exchange to help eCORRUGATED grow their business with a new packaging line.

 

  • Deal value: £400,000

  • Asset type: Machinery

  • Broker: PMD Business Finance

  • Customer: eCORRUGATED

The challenge

eCorrugated logo

eCORRUGATED, one of the largest manufacturers of corrugated boxes, were looking to invest in a third facility line that would be able to produce a larger corrugated box and print with five colours instead of just three. The additional line would open up new markets and revenue streams for eCORRUGATED. The directors at eCORRUGATED had been made aware of a 1998 Emba Packaging Line that had become available in the market, fully refurbished, at a cost of £480k.

A deep understanding of aged hard assets and the complexities of the project identified Investec as a potential funder.

There were various challenges including foreign supply routes and the request for stage payments in Euros whilst the equipment was still overseas. This comprised of 20% deposit, followed by three stage payments and then a 10% retention payment due to the supplier 30 days after commissioning - terms that a lot of other lenders in the marketplace wouldn’t be prepared to facilitate.

Whilst clearly a quality business with a great growth strategy, eCORRUGATED had recently undertaken an MBO and as such had quite a minimal and highly leveraged balance sheet, which might typically dictate requirement for Directors Guarantees. PMD were made aware from the client of a ‘5 Year Supply and Partner Agreement’ which included a guarantee of a 7% EBITDA margin which would be controlled by the input prices of raw material and controlled terms of credit.

 

Flat packed cardboard

Investec’s solution

Ultimately, our in-depth understanding of the key financial aspects, commitment to working with the Broker to shape the deal and our internal asset management team understanding of the true security on the machine is what cemented the deal.

“I’m pretty confident no other funder, certainly in the Tier 1 space, would have supported this client in the way that Investec did… One of the key aspects for both PMD and Investec being able to support this client was the understanding of the project right through the different levels at Investec.

From Stu Hughes, who got under the skin of the deal to help me shape it, to Paul Johnson who had the experience and knowledge to understand the key financial aspects and Investec’s internal asset management team who understood the true security on the machine despite the 1998 original year of manufacture”.
PMD Business Finance

One of the key aspects for both PMD and Investec being able to support this client was the understanding of the project right through the different levels at Investec.

The machine has now been in situ for the last three months and has enabled eCORRUGATED to grow into new markets, both with their existing customer base and they're projecting an uplift in revenues for the current financial year.

Overseas asset purchasing FAQs

  • What is asset purchasing?

    What is asset purchasing?

    Businesses often purchase another company’s assets in the form of stock, equipment, or inventory, through an asset purchase agreement. This type of purchase means that, rather than acquiring the whole company as would be the case when buying from its shareholders, (a share purchase), a business buys and own just those particular assets.

  • What is overseas asset purchasing?

    What is overseas asset purchasing?

    Businesses might choose to purchase assets from a company that trades overseas – this is known as overseas asset purchasing. There could be many reasons for investing in overseas asset purchasing. For instance, it could be that it's not possible to source such an asset in the UK. It may be that there is the opportunity to reach and expand into new, previously unchartered markets, therefore allowing for company growth and increased revenue.

    However, there can be many challenges involved with overseas asset purchasing, particularly with complex terms or stage payments made in other currencies. 

  • How can Investec help with overseas asset purchasing?

    How can Investec help with overseas asset purchasing?

    The timing of overseas asset purchasing is a vital contributor of return potential and risk management – especially if markets are volatile.

    There may be times when an opportunity arises to acquire overseas assets, leading to the potential of increased revenue, but a company has high financial leverage at the time, due to factors such as seasonality or other recent acquisitions. In this situation, a business might choose asset-based lending to secure such purchases with minimal risk.

    If your business has the potential to expand and develop through the acquisition of overseas assets, or such assets are set to meet the needs of your company, Investec could help. Our asset management team will use years of expertise and experience to develop a workable business development strategy and provide the right asset finance to help secure the deal.

    Where appropriate, we work alongside financial brokers to provide a range of bespoke debt structures, including asset-based lending and cashflow strategies (or a combination of both) that are right for your business. Because of our flexibility, your business will benefit from maximising funding availability, including through that of both interest and capital.

    We work on a revolver basis, allowing a lower cost of overall debt and providing flexibility for continued business growth. We can help with stage payments to secure a deal when purchasing overseas assets. 

  • When is asset-based lending not suitable?

    When is asset-based lending not suitable?

    Our asset finance services are not suitable for: 

    • Those with less than £2 million+ EBITDA – we provide asset funding solutions to growth-orientated clients with a typical EBITDA of between £2 million and £75 million.
    • Businesses with headquarters outside of the UK.
    • Businesses that lack significant working capital and are asset-poor.
    • Those outside of owner-managed or private equity-backed companies. 

    Key sub sectors where we might offer asset purchasing funding include, but are not limited to:

    • manufacturing
    • engineering
    • chemicals
    • print & packaging
    • textiles
    • wholesale distribution
    • transport and logistics
    • food and beverage
    • B2B services
    • recruitment

Why choose Investec to help with overseas asset purchasing?

Investec’s asset finance team are on hand to provide a quick financing decision to fuel your business growth and work to a strategy that suits you and your company.

Personal touch

When you choose Investec to help with your asset finance, you’ll have access to one, single, dedicated team, with the same members who'll deal with every aspect of securing your deal. This means streamlined communication and a thorough understanding of all your business objectives.

Specialisation

As part of our asset finance services, we're committed to helping manage cashflow and fuelling your business growth. We have extensive experience across a multitude of sectors including manufacturing, engineering, textiles, transport and logistics, plus a range of B2B services. 

Scale

We have a combined total of £2.2 billion in annual client revenues and our longest client relationship stands at over 12 years and counting. After receiving asset finance solutions from Investec, 75% of our clients have gone on to secure further, significant funding. 

Security

We’re protected by the Financial Services Compensation Scheme (FSCS) and regulated by the Financial Conduct Authority (FCA), so you can be sure of our high standards of service and commitment. 

Award-winning

Our previous awards include Business Moneyfacts Best Leasing & Asset Finance Provider (2019 – 2022 ) and Best Service from an Asset Based Finance Provider (2014 – 2018). 

UK-wide

With 15 offices in the UK, from Belfast to Edinburgh, down to Exeter and St Peter Port, we make it easy to contact us with any queries about asset finance, wherever you are. 

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