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© Business Money Ltd 2006 |
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The
third Business Money CBI Conference Centre, Centre Point, London 25 April 2006 Our first conference was a success, although we felt that the location could have been better. The second conference was a success, and in the CBI Conference Centre we felt that we had chanced upon a far better venue, but we still felt that there was room for improvement – that there was a little something missing. Our third conference was a success and this time we think that we got the balance just about right. Even if the 51 feedback forms had not told us this, the buzz throughout the day and the comment from delegates as they left was rewarding indeed. If our formula of a one-day conference with no presentation exceeding 30 minutes keeps attendance and concentration levels high, maybe we sold the gathering short. Our guest from America, the superb Mike Carsella from LaSalle Bank, scrupulously observed the time constraint though everyone present would have wished him to expand even more on the wealth of information he presented. This year we appointed a chairman with a considerable success story in all-asset finance to his name. Paul Hancock is amongst the most successful exponents of this medium with a powerful track record of achievement at Bank of America before moving on to head up the JP Morgan thrust from London. Paul brought a light, but deeply seasoned touch to proceedings. His opening address included comment on the liquidity abroad in the markets at the moment, much of it chasing sector exposure as a prime aim with investment quality coming next. In this atmosphere, asset values traditionally become inflated and lenders must look to the substance underpinning the numbers against which they are to be exposed. Grant Jones – Squire, Sanders & Dempsey Pensions are never far from the news now and the opening presentation was made by Grant Jones. Grant could never be a politician because at least three times he alluded to projections he made at last year’s conference and then used a phrase one never hears from the denizens of Westminster: “I was wrong”. He was being unnecessarily hard on himself. Pension law and regulation is in a state of flux and he was only “wrong” because the basis upon which he had made his projections 12 months beforehand have been changed. Mindful that today no acquisition, substantial investment or turnaround exercise can take place without considering the company’s pension position, and the acquiescence of the pension trustee, Grant introduced a theme that was to prevail on several occasions during the course of the day: “Getting the best legal advice”. That this is not always happening, and that new players or teams are coming into a complex market, bringing with them no track record in all-asset finance, is a cause for concern (not to mention a cause of lost opportunity – the other constant theme of the day). Lee Manning – Deloitte The opening presentation from Grant was delivered in a rousing style and the message for the industry was unmistakeable: it has a long way to go in presenting a better image to potential users and their advisors. And not only that, but also in ensuring that the capabilities it has to offer are better known. Lee examined the historic background behind the rise of ABL and developed the theme through market conditions and trends. He looked at private equity and turnaround funds, the traditional partners for the all-asset financier, but he focused quite hard on the perception of the all-asset-based lender and some of what was revealed not only made unhappy listening but was contended in part by some subsequent presenters. Healthy debate is always a good sign! Developing a theme on a positive note, Lee then emphasised some critical success factors for future growth and other opportunities that might present themselves. Clearly, Lee has many times been in a situation where he has had to advise users of all-asset-based lending. One or two of the themes that came across would be just as familiar to old-time bankers, but that does not excuse complacency. Mike Carsella – LaSalle Business Credit No conference on all-asset finance would be complete without a hard look at new developments in America. Mike Carsella, first vice president in the cross-border finance group at LaSalle Business Credit LLC, had clearly done a great deal of preparatory work – his was a presentation where I wish I had made more time available. You just have to watch the eyes when sitting facing a gathering such as this and whilst the term “spellbound” is one that is more appropriately linked to showbiz, Mike’s rousing, at times humorous, and always very informative delivery was compelling listening indeed. Of special significance was the status achieved by secondary debt/junior lien providers and the trends identified by Mike which will surely be seen in the UK and Europe in the not too distant future. Another message that emerged, one that will bring no surprise to bankers here, is that more American players are looking to the European market, probably using England as a springboard. Andrew Pepper/James Grenfell – Kroll Andrew and James treated us to a double act so that both sides of the debate regarding the use of all-asset finance in the turnaround could be considered. Our friends at Kroll have long wished the world to hear the message that much of their work involves turning around and reinvigorating middle-corporates and, whilst much of the theme they delivered was familiar, it was none the worse for reminding providers and end users of the importance of clear thinking and professionalism in successful turnaround exercises. Open forum debate, chaired by Paul Hancock – JP Morgan Open forum debates are always a slightly contentious part of our conference packages. They do not always receive rave reviews and a substantial number of people are probably terrified at being asked to contribute, in the knowledge that there are some fine minds in the room. Fortunately, the fine minds held the floor here and there are few finer than that of Paul Hancock who was able to stimulate some debate and add a touch of humour so that, once again, this session proved its essential worth to the conference. Contributions from Brent Osborne, Myles Halley, Andrew Visintin, and others of their ilk soon revealed the trends towards the core theme of our conference and we established that the all-asset finance industry has a long way to go in maximising cross-border opportunity. Given that this medium is still very much in its pioneering phase this is no surprise but the quest for excellence must be sustained and will reward those who persevere with higher levels of safer business exposure. My thanks to those who participated here. It is arrogant in the extreme to present all day to an audience with the intellectual levels that we had assembled. Given that these conferences are supposed to be for the benefit of all those attending, hearing spontaneous, yet considered and seasoned, opinion from those with regular front-line experience is helpful for everyone. A major theme to emerge was the prospect of knowledge sharing and, given the number of syndicated deals now being seen, this is not such a preposterous notion as it may at first sound in what is essentially a competitive field. We then adjourned to lunch. Following adverse comment last year, we tightened this break up to an hour and a quarter but, nevertheless, much networking took place and the feedback on the quality of the refreshments reflects much credit to the catering staff at the CBI Conference Centre. Dennis Turner – HSBC Dennis Turner ever brings to the show that wonderful gift of delivering complex economic thinking in a digestible and humorous form. The feedback forms indicated that whilst many had heard him before they are always happy to hear Dennis again and certainly he did not let us down at the 2006 conference. Lively, humorous and punchy, he left us all feeling that the UK economy has to struggle with a number of challenges and it could well impact upon our economic health. Whilst we have clearly outperformed Europe, that isn’t really saying much. And being best of a bad bunch may not insulate us from the considerable competitive pressures to be found in other parts of the world. We cannot use Dennis every year. Last year, Nils Blyth, the BBC business correspondent, gave us a fascinating view of world developments but Dennis will always be on the shortlist, whenever possible, as indeed would Nils. David Kelsey – Venture Finance Peter Anderson – Lloyds TSB Commercial Finance If some of the all-asset finance players present were feeling a little bruised by one or two of the, suggested, perceived shortcomings emerging from the conference’s morning programme, they rallied to David Kelsey with great warmth. David needs no introduction to the frontline warriors in this business and his presentation regarding the way the world is going made for sobering listening. It is a world of fewer covenants, thinner margins, lower fees and a more entrepreneurial attitude to all-asset finance lending. In our sphere “more entrepreneurial” and “riskier” are phrases that go hand-in-hand but competitive pressures have done this in every other area of commercial finance and the all-asset medium cannot pretend it is going to be insulated from it. Peter Anderson of Lloyds TSB Commercial Finance then took the floor and he took us through a complex case regarding the refinancing of the Milk Link group. Given that I was a specialist banker to the dairy sector for some years I found this one particularly interesting because Milk Link is the successor to Milk Marque which itself had taken over from the Milk Marketing Board. This is a cooperative with 2,200 members that wishes to improve upon the yields on milk by adding value to it through processing it into other products. Anyone with a grasp of the dairy industry and an eye for the milk prices charged in supermarkets will know that the future in pure liquid milk in the UK is bleak and this is the only way that Milk Link could go. What I liked about this exercise was the way in which Lloyds TSB Commercial Finance accepted the shortcomings of financing a cooperative like this. Despite enormous concentration levels at certain times of the year, the deal still went ahead. For those who have never worked in the agricultural industry, or communities where it forms the backbone of the economy, maybe it was not the most riveting stuff but for those who had it was compelling. Stuart Marshall – Litmus Advisory If the all-asset financiers present at the conference had found some relief from the theme of missed opportunity they received another dose when Stuart took to the stage. Litmus Advisory specialises in turnaround and the refinancing of companies where a private equity owner or venture capitalist wishes to exit from a time expired or living dead situation. It should be borne in mind that, in stressing his priorities and objectives, that this is the customer speaking (or, at least, someone who advises customers). Given that we all know that the perfect bank facility is as much as you want, for as long as you like at no cost, the meeting point of what the customer desires and prudent banking would be, at best, an indistinct point along the road to success in commerce. That said, Stuart, who has considerable experience in this field, did raise a number of issues which, if an all-asset financier can address them, would guarantee it a stream of steady business. The scores on the feedback forms suggest that the presentation, whilst hard-hitting, evoked a strongly favourable response and that has to be encouragement for everyone. Andrew Visintin – Squire, Sanders & Dempsey It was then Andrew’s turn to take to the podium and, ably assisted by Grant Jones on occasions, he proceeded to cover a number of areas where he felt that the development of all-asset finance could be refined and accelerated. Speaking as one who unravels situations into which a lender should never have descended and who sees opportunities missed though poor legal advice, Andrew stressed that cross-border all-asset finance is an area of immense opportunity but also one of immense risk too. Like Stuart before him, whilst the message he imparted was robust, it was constructive and well received. I have deliberately refrained from going into print on the essence of all of the presentations as, to my mind, this is the preserve of those who paid to attend. The overall view is that our conferences help move the industry forward and the feedback forms voiced overwhelming approval. We will be following up on a number of areas and I will close by thanking a first class team of presenters for all of the hard work and preparation they did and also my team at Business Money who helped to put it all together. A CD of the PowerPoint presentations of each speaker is available at the cost of £150.00 + VAT. Editor
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