What does your role entail and how is the ABL team structured at Wells Fargo? 

I lead the originations efforts for Wells Fargo Capital Finance in the UK, working with a team of business development officers to source, structure, and fund asset-based lending (ABL) transactions, while also working closely with customers, private equity firms, and business advisors. 

 We provide strong national coverage, through our offices in London and Manchester, and have a proven track record of working with our customers to help develop and grow their businesses.

What are your general cheque sizes, sector and geographic focus? 

As one of the world’s leading banks, we specialise in providing comprehensive ABL senior debt facilities across a range of sectors that include retail, equipment rental, manufacturing, wholesale and distribution, food and beverage, and engineering. 

We focus on supporting businesses headquartered in the UK and North America, with ABL facilities ranging from £10,000,000 and upwards, to support working capital requirements, growth or acquisition financing, MBO / MBI’s, and recapitalisations. We also are capable of providing cross border structures utilising assets in multiple jurisdictions. 

How do you work with private equity firms and how much of your business does this make up?

We continue to enjoy great success working with private equity firms, which are involved in over half of our transactions, to support their acquisitions and the ongoing working capital needs of their portfolio companies. 

We believe our ability to deliver results, coupled with our speed of execution make us a top choice for private equity-backed companies.
We also recently supported Fortress, a U.S. investment firm, with an acquisition of Majestic Wine, a specialist-leading UK wine retailer. Acting as sole lender, we provided a £55,000,000 credit facility to assist with the initial purchase, fund future strategic growth, and provide ongoing liquidity. 

Additionally, we have the credit appetite and flexibility to deliver bifurcated debt structures, where we provide a revolving asset based loan alongside a specialist term loan provider to maximise debt capacity for the private equity borrower.

We recently partnered with Bridgepoint Credit, to provide a funding package to Acorn Growth Companies to assist in their acquisition of a leading Aerospace business. 

Wells Fargo is a leader in asset based lending in the retail sector, why is this? In such turbulent times, how do you diligence retail businesses to lend to?

Our extensive experience and robust history working with both UK and U.S. retailers enables a pragmatic and balanced view of the sector. 

We take the time to understand the financial profile of each borrower and structure a revolving credit facility predominately utilising the inventory assets as collateral security. As with most retailers, the revenues fluctuate seasonally and our expertise allows us to structure a facility that complements and minimises the working capital impact. 

How has the perception of ABL changed over the last 10 years?  

ABL continues to evolve into a more widely-used product here in the UK, especially for asset-intensive companies looking to source competitively priced debt capital. Due to its secured nature, asset based loans can be deployed into both growth and acquisition opportunities as well as turnaround or stressed situations where the cashflow market may not be comfortable. 

The majority of customers we support in the UK are focused on growth and acquisition opportunities. Advisors have become more knowledgeable of the ABL product over the past 10 years, and more frequently are including relevant balance sheet and asset information to assist the asset based lender in making informed credit decisions.

At Wells Fargo, we value our customer relationships and pride ourselves on delivering long-term solutions to help our customers succeed financially. Above all, this approach continues to raise the profile of asset based lending.

Looking forward, how will ABL continue to grow?
We see increasing opportunities to broaden the size of our credit facilities and to bring our expertise to more industry sectors. 

In addition, our ability to provide a cost effective tranche of working capital liquidity allows us to increasingly collaborate with other debt providers to deliver a lower blended yield to the borrower.

There’s ongoing conjecture as to whether we’re reaching the top of the economic credit cycle and if so, ABL can become more relevant in a downturn as other sources of funding tighten up.      

At Wells Fargo, we are committed to supporting our customers throughout the business cycle. We continue to work with all of our stakeholders to educate them on our capabilities and deliver bespoke funding solutions to support their strategic priorities.