Agricultural businesses are set to benefit from a £15m boost in lending following a funding deal between the Royal Bank of Scotland Financial Institutions team and one of the sector’s fastest growing asset finance providers, Praetura Asset Finance.
It follows news that falling commodity prices and the strong pound continue to squeeze many farm businesses, with the latest version of the Agricultural Budgeting and Costings Book warning there is little immediate prospect of a turnaround in commodity prices.
Mike Hartley, managing director at Praetura Asset Finance, commented: “The timing of this deal couldn’t be better. Many farming businesses are continuing to struggle financially due to pressure on pricing while value is tied up in their assets.
“This new £15m pot will ensure we can continue to support them with our pragmatic approach to providing client-focused and time-critical funding that has enabled many to overcome short-term cash flow difficulties or invest in diversification.”
Established in January 2014 with backing from Praetura Capital LLP, Praetura Asset Finance has put pen to paper on a three-year committed revolving facility, which will enable the company to build on its success in lending £25m within its first year of trading. By lending commercially to SMEs via a selective introducer base, Praetura aims to grow its lending book sensibly over the next 4-5 years to over £100m.
Mike Hartley continued: “This is a significant transaction for us and will provide a solid platform to accelerate our lending book to £100m.
“There is a huge appetite for our facilities as the farming sector continues to address the challenges of aggressive supermarket pricing policies and uncertainty over EU subsidies.
“The £15m funding from RBS, in addition to our recent £12.5m cash injection from Praetura Capital LLP, will create further capacity for us to service new farming clients and continue expanding our geographical reach.”
The company offers a wide variety of alternative funding solutions for agricultural businesses, including hire purchase, refinance and leasing facilities to support equipment purchase, business expansion, diversification and general cash flow purposes.
Figures released last week by the Finance & Leasing Association (FLA) revealed growth of 12 per cent in plant and machinery asset finance in April 2015, compared with the same month last year.
Praetura Asset Finance was provided with corporate finance advice by Gary Davison from EY and legal advice by Gateley Plc.
