Star Asset Finance group chief executive officer Steve Swift speaks to Brian Cantwell about Credo, the business’s most recent acquisition.
What were the plans in acquiring Credo?
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They approached us, via Star. We had spoken to them a couple of years ago but they were not quite ready to sell at that point. They pushed their business forward over the proceeding two-year period, and then approached us again when they were a much more attractive offering for us.
Credo had built its business, it had got an established own-book, and they had also increased their sales team & back office staff, so they had become a much more rounded business.
Are there any things Credo does not fund?
Credo fund most assets. They fit in with exactly what Star Asset Finance do, the hard assets are very similar to the hard assets Ignition, and First Capital fund, and the soft assets are very similar to the assets that Kennet do.
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By GlobalDataCredo are very regional-centric, so the majority of their business is based within the locale, within a certain radius of their Norwich offices. They needed the resources and the help to make that circle wider, and that works perfectly for us, because they are in a very good position.
Norwich is not far from the edge of London, it has got the eastern coast to go at, and all the business that operates in that area, so there’s a large amount of SMEs that will be looking for funding, just by helping them lend more, with our funding facilities, we are able to help them increase their business substantially.
Do you think that there might be more of a shift in SMEs moving outside London?
As the price of doing business in London increases, many small businesses that don’t rely on local customers will/ have relocated outside central London & With First Capital in Bournemouth and with Credo in Norwich, we are slowly but surely encroaching onto that London area without having the huge overhead costs. Obviously, another acquisition closer to central London will make this job easier, so we will have to wait & see what comes along!
With Credo’s addition, we will be looking at £200m of new business this year, which is starting to make Star Asset Finance a significant player in this market.
That said, we are not shy of doing any more acquisitions, the asset finance industry is such a huge market, even if the political effects of the past 12 months have an effect on the economy, with the funding we have in place, it shouldn’t affect us too adversely.
Was the acquisition more about the sectors they cover over the area?
I think it is more area than sector. The sectors are very similar to what we know. We are always open to looking at new marketplaces, where we are very good at minimising the risk. Whatever business we look at in the future, will be based upon its future as well as how it’s done historically.
What does Star want to do with Credo?
We obviously have a focus on building our own book. Our receivables will be £100m by the end of this year, that’s exactly on line with where Star want to be, so it’s then just making sure that, with the proper funding, we can continue that level of growth.
We are still very well supported by funding partners, and we are still broking a good proportion of our business – we plan to help each business reach more customers with our own funding, but still be a major player in the broker market as well. We pretty much have the best of both worlds!
Are you looking to develop acquisitions based on the type of broker that they are?
We will work with any broker to assess their suitability for acquisition & they don’t necessarily need to have an established “Own Book” in place to be attractive. We want to make sure that a proportion of the equipment that they are funding can be easily converted to our own book & they have a great management team that we can work with & who can work with us to continue to grow their business.
Star is not about changing a great business, they want to work with the business to help make it better.
Now that our industry has become a lot more regulated, I think that being part of a group that embraces these changes & has the resources to keep pace with how fast it is moving, means that we can take much of the uncertainty and red tape out of this process and concentrate on looking after our customers better.
Is increasing competition a challenge?
If you had asked me that 12 months ago I would have probably said I would have seen greater competition for us, but having had a lot of new funders enter the market, (I think there are more than a dozen new banks getting banking licences this year) it actually brings more facilities to the marketplace, which as a broker we can also benefit from.
As long as you are doing your job well and looking after your customers, and looking to provide better facilities for new customers, we will increase market share and we will work with some of those new entrants as future funding partners.
What does the rest of 2017 look like?
There will be a lot of hard work. We will help Credo to consolidate into the group; we will be looking to learn from what they have been doing over their time as a broker/funder.
We will help them share the resources and the facilities that we have built up over the three years since Star acquired Kennet, Ignition and First Capital.
Star Asset Finance will continue to reach out to more SME’s across the UK and help them with their specific asset finance needs.
