Posted inAsset Class in Focus

Weak bank lending an opportunity for asset financing

With lending activities of UK banks yet to recover to pre-crisis levels, direct lending as an investment strategy fills a financing gap, said Craig Reeves, founder of Prestige Asset Distribution.

UK-based Prestige deals with non-commoditised loans to small businesses in the UK and has made a speciality of lending to the farm and food sectors.

Focused on asset-finance and invoice finance, Prestige likes small businesses as a client group and has a particular focus on the UK agricultural rural community. Over the past 15 years, the firm has conducted 16,000 transaction with about 17,000 customers, he said. 

Demand for investment in various energy-saving ideas and equipment is an opportunity for Prestige because banks are taking longer to make decisions on lending for expensive modern equipment, Reeves believes.

“What we like about the farming community is that they typically are asset-rich and cash-poor in terms of having a lot of land,” he said, speaking at Fund Selector Asia’s recent Alternatives Forum.

UK farmland is currently the most valuable land in the world and has significantly outperformed central London real estate as an asset class, Reeves said. He added that the farming community owns, controls or manages about 70% of the UK’s land mass.

Yet the farming community and food industry are under strong pressure to become more efficient as electricity rates in the UK are among the most expensive in Europe.

Adding to the pressure is the increasing cost of waste disposal in the UK, where landfill costs have almost doubled in the past few years. Animal, food, plant and farm waste are now under restrictions that prohibit them from being dumped in landfills. 

“If you want an anaerobic digester, or bio-gas plant or some form of specialist equipment, or machinery, or vehicles,” he added, “then maybe we can make that decision and finance for you more quickly.

“What a lot people like is that we’re quite boring. We’re quite back-to-basics as we don’t have any leveraged derivatives, black boxes or exotic financial engineering.”

Part of the Mark Allen Group.