In July 2013, a consortium led by Next Capital acquired a controlling interest in Scottish Pacific (“ScotPac”). ScotPac is Australasia’s largest non-bank debtor finance provider, offering financial products including factoring, invoice discounting and import trade finance to Small and Medium-sized Enterprises for whom traditional banking facilities are either unavailable or uneconomic.
The investment was predicated on:
- ScotPac’s leading market position in a niche segment with significant barriers to entry;
- low-risk growth potential associated with the business’ ability to leverage strong underlying long-term demand in the core debtor finance market;
- incremental growth potential associated with the (then) newly established FactorONE and Trade Finance divisions, with further upside to the extent the business could establish a white-labelled debtor finance service offering for domestic and/or international banks; and
- a very strong, experienced and incentivised management team, with a history of delivering strong year-on-year growth through economic and credit cycles.
During Next Capital’s investment period, Next Capital worked closely with the management team of ScotPac to develop and execute on a strategic plan which enhanced shareholder value:
- bolstering the management team to allow the CEO to work ‘on’ rather than ‘in’ the business;
- developing new products and channels;
- broadening the company’s funding base to establish a sustainable, diversified and lower cost platform; and
- undertaking strategic acquisitions, including the acquisition of Bibby Financial Services Australia (# 2 independent debtor finance provider), GE’s debtor finance book (# 3 player) and Suncorp’s debtor finance book.
The initiatives above delivered a major step-change for the business, as ScotPac’s loan book more than doubled.
Next Capital successfully completed the IPO of ScotPac in July 2016.