Securing financing post
credit crunch
July 2012
The credit crunch has transformed the landscape…
Iceland banks failed
Iceland struggles for control as
third bank is nationalised
The Times, 10 October 2008
Iceland takes over Glitnir Bank
Global Banking News, 9 October 2008
Irish banks failed
Irish bank [Anglo Irish Bank] set
to be nationalised
16 January 2009
UK banks failed
UK banks receive £37bn bail-out
bbc.co.uk, 13 October 2008
Government to provide €3.5bn
each for AIB and Bank of Ireland
RTE, 11 February 2009
There has been a fundamental reduction in bank capacity before lending ‘appetite’
and the current Eurozone crisis is even considered
© 2012 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated
with KPMG International Cooperative, a Swiss entity. All rights reserved. Printed in the United Kingdom.
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…and there’s more good news on the way!
Estimated European Leveraged Loan Maturity profile
Loan pricing
50
600
45
500
35
Margin (bps)
Volume (€bn)
40
30
25
20
400
300
200
15
10
100
Leveraged
1Q12
3Q11
1Q11
3Q10
1Q10
3Q09
1Q09
2018
3Q08
2016
2017
As of Jul 30
1Q08
2015
3Q07
2013
2014
As of YE2009
1Q07
2012
3Q06
0
0
1Q06
5
Investment Grade
High yield bond issuance
14
25
20
Proceeds ($bn)
10
8
15
6
10
4
5
2
Why is this relevant to West Midlands
businesses?
0
Jan-07
Apr-07
Jul-07
Oct-07
Jan-08
Apr-08
Jul-08
Oct-08
Jan-09
Apr-09
Jul-09
Oct-09
Jan-10
Apr-10
Jul-10
Oct-10
Jan-11
Apr-11
Jul-11
Oct-11
Jan-12
Apr-12
0
Number of issues
12
Proceeds ($bn)
Number of issues
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with KPMG International Cooperative, a Swiss entity. All rights reserved. Printed in the United Kingdom.
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The range of funding sources is increasing
Sovereign
Wealth Funds
HY Bond
Market
Size of requirement
Hedge funds
Mezzanine
funds
Private
placements
Private
equity
Insurance/P
ension funds
Credit funds
High Net
Worth
Individuals
Grants
Clearing
banks
Family
offices
Asset
backed
lending
Venture
capital
Development
capital
Retail bonds
Liquidity is still there – it just isn’t
where it used to be!
Maturity of company
© 2012 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated
with KPMG International Cooperative, a Swiss entity. All rights reserved. Printed in the United Kingdom.
3
The State is looking to facilitate increased lending
Existing options
Not yet launched
Enterprise Finance
Guarantee
Business Angel CoInvestment Scheme
National Loan Guarantee
Scheme
Project Merlin
Enterprise Capital Funds
Seed Enterprise Investment
Scheme
Business Finance
Partnership
Business Growth Fund
Bank of England launches
lending stimulus
15 June 2012
© 2012 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated
with KPMG International Cooperative, a Swiss entity. All rights reserved. Printed in the United Kingdom.
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The steps to secure funding
CORPORATE
STRATEGY
FUNDING
STRUCTURE
OPTIONS
WHY YOU?!
PREPARE!
PREPARE!
© 2012 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated
with KPMG International Cooperative, a Swiss entity. All rights reserved. Printed in the United Kingdom.
PREPARE!
5
Maximise your planning time
Successful
refinancing of your
business
Strategy
assessment
T-12 to T-6 months
Preparation of
proposition
T-6 to T-3 months
Engagement
with funders
Refinance
completion
T-3 to T0 months
© 2012 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated
with KPMG International Cooperative, a Swiss entity. All rights reserved. Printed in the United Kingdom.
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Credit is scarce – how can you and your business stand out?
What is the current ‘bar’?
■ Coherent and clear growth strategy
Evidence sources
■ Articulation of business strategy;
■ Proven track record
■ Clear explanation of the business and
its key drivers;
■ Management – incentivised and
capable viz-a-viz ‘growth and shocks’
■ Approach to mitigating risks;
■ High quality financial information
■ Risk awareness
■ Detailed scenario planning
■ Robust forecasts;
■ Rationale for financing requirement;
■ External validation eg asset
valuations, due diligence
© 2012 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated
with KPMG International Cooperative, a Swiss entity. All rights reserved. Printed in the United Kingdom.
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Speaker
David Reitman
Partner, Debt Advisory
Tel: +44 (0) 20 7694 3113
david.reitman@kpmg.co.uk
© 2012 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated
with KPMG International Cooperative, a Swiss entity. All rights reserved. Printed in the United Kingdom.
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© 2012 KPMG LLP, a UK limited liability partnership, is a
subsidiary of KPMG Europe LLP and a member firm of the KPMG
network of independent member firms affiliated with KPMG
International Cooperative, a Swiss entity. All rights reserved.
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registered trademarks or trademarks of KPMG International.