<
p>A former Manchester-based lender has been reborn as an asset-based lender, after agreeing a facility with Shawbrook Bank.
A management team paid administrators £2.5 million in November for the residual Davenham loan book, and have now launched Davenham Asset Finance which offers small and medium-sized businesses loans of £5,000 to £500,000 - secured against equipment and other assets.
Led by Paul Burke and Heather Robinson, Davenham Asset Finance will serve the needs of SMEs in the North of England, enabling them to finance new or used assets or to refinance existing ones.
An initial cornerstone facility has been arranged with Shawbrook Bank, with plans to increase the facility in line with the company’s growth aspirations.
The Davenham brand is returning to the lending market for the first time since it closed its loan book several years ago, and the subsequent successful reduction of total banking facilities of circa £0.5 billion.
Commenting on the firm’s return to asset finance, Paul Burke, Director of Davenham, said: “The recent report from the Bank of England shows that net lending fell £300 million in the first quarter of 2013. As a result we are launching at a time when borrowing through traditional methods continues to be difficult, creating a greater demand for fast and flexible alternative finance.
“In addition there is a need to revert to the old fashioned values of service and empathy, discussing people’s needs and doing your utmost to find a solution.
“Prior to Davenham plc’s demise, following the financial crisis and subsequent property crash, the Group’s Asset and Trade Finance divisions operated successfully. I am therefore confident that we can draw on that experience to re-enter both the asset-based lending and, in the very near future, trade finance markets and build a successful business.
“Having been in this sector for more than 20 years I strongly believe, together with my co-director Heather Robinson and the team, that there is a growing market for this type of funding. We are therefore looking forward to the company becoming a respected independent lender and employer working with companies in the North.”
Speaking on behalf of the funding line, Paul Tagg, Director of Wholesale at Shawbrook Bank Limited, said: “We are very pleased to have enabled Paul and Heather to introduce Davenham back into the Asset Finance market. I have, together with a number of my fellow directors, known Paul for over twenty years and we wish them every success for the future. They have a tremendous amount of experience and it has been a great achievement to return the Davenham brand back to the lending market.”
Stock market-listed Davenham had a significant exposure to the property sector and got into trouble when values plummeted, following the 2008 financial crisis. It ceased new business in mid-2010, after reporting an operating loss of £55.4 million in the year to June 2009. According to sources, its asset and trade finance business was regarded as ‘salvageable’.
It went into administration in October 2011, leaving a syndicate of banks led by Royal Bank of Scotland facing a loss of nearly £64 million. A small team stayed on, managing the loans and recouping payments for the firm's creditors.
An April report from administrators Duff & Phelps said £21.6 million had been returned to the lenders, including the sum paid by management with administrators expecting to collect a further £1.2 million. "Overall, there will be insufficient realisations to pay the banking syndicate in full," they said.
A former Manchester-based lender has been reborn as an asset-based lender, after agreeing a facility with Shawbrook Bank.
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