Land Energy secures £6m funding from IGF
Rapidly growing biomass fuel manufacturer Land Energy (LE) has secured £6m in funding from Independent Growth Finance (IGF). The asset business lending (ABL) package includes invoice finance, inventory and equipment facilities. The significant working capital will enable the company to expand its operations and develop a new, clean-burning briquette aimed at the domestic solid fuel market.
Land Energy, based in Scotland, was founded in 2006 by a group of entrepreneurs determined to reduce pollution caused by the UK’s energy industry. Its initial focus was on biomass energy sources to create a viable wood pellet manufacturing base. Over the past 15 years, the company has become one of the largest wood pellet manufacturers in the UK. It now supplies both commercial and domestic markets under its various brands and is focused on de-carbonising the heat market.
Sustainability is at the heart of the LE ethos and influences all aspects of its operations. As a result, it has been awarded Proud Supporter status with UNESCO’s Galloway and Southern Ayrshire Biosphere – and it is the Sustainable Leader within its industry.
LE products are made from entirely sustainable local sources, and it focuses on markets that can make a real difference in helping to reduce the UK’s carbon footprint. LE supplies many hospitals and care homes across the UK, which use its wood pellets for heating and hot water. LE also supplies domestic users.
Increasing demand for sustainable heating fuel solutions drives growth
The UK government’s ban on the use of coal and unseasoned firewood in domestic settings, under the Clean Air Strategy, has meant increasing demand for sustainable sources of heating fuel. LE has identified an opportunity to grow its business by adding a new biomass briquette production line to complement its wood pellet offerings. The company needed to scale up operations at its Girvan site by adding new facilities and equipment, increasing its employee headcount to around 60 people, and adding more permanent subcontractors in its supply chain.
To realise its expansion plans, LE needed additional working capital and embarked on a search for a finance partner to advance against inventory and sales invoices. Discussions with mainstream lenders proved unsatisfactory as the inflexibility of their funding models restricted them. LE needed a partner who was prepared to take an independent view and be flexible in providing funding to reflect the seasonal nature of their markets.
Finding the right finance partner
Via their shareholder, BRG Asset Management, LE entered discussions with IGF, and as a result, rapid and flexible financing options were identified.
John Westmacott, managing director of Land Energy, commented: “It was clear to us from the outset that IGF understood our business and was able to develop appropriate financing solutions. This gives us access to capital which enables us to fund expenditure on the new plant. Importantly, this financing will ensure the plant becomes revenue-generating in the shortest possible time. We view this initial finance facility as the first stage in our relationship with IGF, and we look forward to working with them as our business continues to grow.”
Jon Hughes, director at IGF, commented: “We are excited to partner Land Energy, helping it to grow an important and sustainable business that will have a positive impact on the UK’s carbon footprint. IGF took the time to understand LE’s business requirements and put in place a flexible funding package. We are very much looking forward to a long-working relationship, based on the company’s needs.”
