Hitachi Capital (UK) plc and British Business Bank agree £100 million facility to increase asset finance for small businesses
- Transaction is first of British Business Bank’s new ENABLE Funding programme
- Agreement will significantly increase the supply of asset finance solutions for small businesses
- The European Investment Fund will guarantee 50% of the facility
The British Business Bank today agreed to provide a £100m facility to Hitachi Capital UK to fund a portfolio of newly originated small business asset finance receivables. The transaction is the first of the British Business Bank’s innovative new ENABLE Funding programme, which aims to increase significantly the supply of leasing and asset finance to smaller businesses in the UK. The European Investment Fund will guarantee 50% of the facility.
Gavin Wraith-Carter, General Manager, Hitachi Capital Business Finance said:
“Being the first funder to take part in an ENABLE funding programme transaction reinforces our commitment to understanding the specific needs of SMEs and offering tailored financial solutions that fit their business requirements. As a leading provider of business asset finance, we offer SMEs a valuable alternative to mainstream lending, allowing businesses to free up cash flow and to budget appropriately for the equipment they need to remain competitive. This initiative is a fantastic example of how Hitachi Capital looks at new and fresh ways to generate increased use of alternative lending to UK SMEs.”
Reinald de Monchy, Managing Director, Wholesale Solutions at the British Business Bank, said:
“This £100 million transaction with Hitachi Capital is the first in our new ENABLE Funding programme, which aims to boost the availability of asset finance. We are planning a number of further transactions over the next 18 months, and to refinance these facilities through securitisation once they achieve the required critical mass.”
Bernard Skivington, Director, Wholesale Solutions/Asset Finance at the British Business Bank, said:
“Asset finance is vital to many high-growth small and medium sized businesses. As these businesses grow and scale-up they will look to buy or replace plant and equipment, and it is essential that they are able to get the funding they need to do so.”
George Passaris, Head of Securitisation at European Investment Fund, said:
“We are very pleased to be participating as guarantor in this innovative facility for Hitachi. The involvement of EIF in the ENABLE programme signals EIF’s attention towards the UK non-bank finance providers and EIF’s will to facilitate additional financing for UK SMEs.”
The programme will allow Hitachi Capital UK to expand substantially its provision of business asset finance. Hitachi Capital UK works through finance brokers and vendor organisations to provide a diverse range of products to smaller businesses including hire purchase, operating lease and finance lease solutions.
The ENABLE Funding programme aggregates asset finance portfolios from these important mid-market providers in a warehousing financing facility.
In order to build the critical mass necessary to securitise the assets, the ENABLE Funding programme will be announcing similar agreements with other funders over the next 18 months. Facilities will range from around £25m to £150m, and the programme will aim to refinance the warehouse facilities when receivables total approximately £300m. This refinancing, the first such transaction of its type in the UK, will allow institutional investors access to a large and highly diversified pool of SME debt, and is intended to help kick-start asset finance securitisation more widely.
In October 2014, British Business Bank asked NIESR to examine the market for SME securitisation in the UK. The full report is available in the research section of the British Business Bank website.
For more information please contact:
British Business Bank
Scott Shearer, email@example.com
Nick Taylor, firstname.lastname@example.org
0207 199 2200
Rebecca Ellis-Owen email@example.com 01342 870 943
European Investment Fund
David Yormesor firstname.lastname@example.org +352 24 85 88 346
Notes to editors
About ENABLE Funding
The British Business Bank’s ENABLE Funding programme seeks to incentivise the provision of finance to viable UK companies by providing funding for smaller bank and non-bank providers of asset finance, many of which are unable to access cost-efficient funding from the capital markets. The ENABLE Funding programme is delivered by British Business Bank Financial Services Limited on behalf of the Department for Business, Innovation and Skills.
About British Business Bank
The British Business Bank was established to make finance markets for smaller businesses work better, enabling the sector to prosper, grow and build economic activity. Its objectives are to:
- increase the supply of finance available to smaller businesses where markets don’t work effectively
- help create a more diverse and vibrant finance market for smaller businesses, with a greater choice of options and providers
- build confidence in the market by increasing smaller businesses’ understanding of the options available to them
- achieve this whilst managing taxpayer resources efficiently and within a robust risk management framework.
British Business Bank plc is a development bank wholly owned by HM Government. The British Business Bank operates through a number of subsidiaries, including British Business Financial Services Limited. Neither British Business Bank plc nor British Business Financial Services Limited is authorised or regulated by the Prudential Regulation Authority (PRA) or the Financial Conduct Authority (FCA). British Business Bank plc and its subsidiary entities are not banking institutions and do not operate as such. More information can be found at www.british-business-bank.co.uk
About Hitachi Capital
Hitachi Capital’s business finance unit has quickly become a leading provider of SME business asset finance in the transport, agriculture, construction, manufacturing, alternative energy and materials handling sectors, with additional expertise in block discounting and syndication services. Funding through the British Business Bank ENABLE initiative ensures further targeted lending to UK SMEs.
Hitachi Capital is the UK-based subsidiary of Hitachi Capital Corporation, one of Japan’s largest non-bank financial institutions. It was established in the UK in 1982 and has since expanded to include four key finance divisions with a loan book of around £3bn, serving customers ranging from consumers to SMEs and large corporates.
About the European Investment Fund
The European Investment Fund (EIF) is part of the European Investment Bank group. Its central mission is to support Europe’s micro, small and medium-sized businesses (SMEs) by helping them to access finance. EIF designs and develops venture and growth capital, guarantees and microfinance instruments which specifically target this market segment. In this role, EIF fosters EU objectives in support of innovation, research and development, entrepreneurship, growth, and employment. EIF’s total net commitments to private equity funds amounted to over EUR 8.8bn at end 2014.
With investments in over 500 funds, EIF is a leading player in European venture due to the scale and the scope of its investments, especially in high-tech and early-stage segments. EIF’s guarantees loan portfolio totalled over EUR 5.6bn in over 350 operations at end 2014, positioning it as a major European SME guarantees actor and a leading micro-finance guarantor.