Westlake Funding Ltd is offering wholesale investors the opportunity to invest in Westlake for a fixed term on a fixed yield with the possibility of additional upside for investors.
Debtor finance, often referred to as factoring, has long been recognised as a useful cash flow tool for growing businesses globally.
Businesses experiencing growth in industries such as manufacturing, wholesale trade, transport and service industries, often with “blue chip” clients, regularly find themselves in “cash flow distress” because they outgrow their capital base or because their customer’s payment terms are longer than their supplier’s payments terms
There has been consistent growth in the appetite for debtor finance in Australia over the last decade, with debtor finance increasingly being seen as a mainstream finance product rather than a niche market, or a lender of last resort.
Because the SME finance market is severely underserviced through traditional banking channels, SME’s regularly find Debtor Finance or Factoring essential to the growth and development of their enterprise.
Australia’s Debtor Finance Funding Gap
The significant hurdle to the growth of most privately owned Australia factoring and debtor finance businesses is the lack of access to reliable working capital.
Ben Andrews, Financial Controller at Westlake Funding Ltd, a specialist Wholesale Funder of Debtor Finance or “Factoring” businesses highlights the market opportunity.
“There are few SMEs that know a lot about debtor finance or in some cases even that it exists, let alone understanding the extent to which it can assist their business’s cash flow and the growth of their business. But at the same time many smaller Factors and similar debtor finance businesses have limited access to capital to service this growing market, to assist more Australian SME’s and to grow their own Client base.
Westlake Funding has identified a glaring gap in the market in servicing these Factors and debtor finance companies by providing them with a stable source of reliable wholesale funding.”
Capitalising on SME credit Demand
The Debtor Finance Businesses that Westlake Funding support in turn provide working capital through debtor finance to Australian SME’s on the basis that ALL receivables, that is all invoices and the underlying credit risk, are credit insured with a rated international credit insurer and the benefit of that insurance is assigned directly to Westlake.
Mr Andrews is very bullish about future opportunities.
“There are a number of private debtor finance companies in the market ready to exploit the funding gap between banks and SME businesses. Debtor finance is ideal for most businesses who sell on credit terms longer than their supplier’s credit terms, and there are an increasing number of businesses that fall into this category.”
Mr Andrews continued, “We aggregate this demand with our wholesale facility and overlay a proven risk mitigation process over the transactions; but further than that, our philosophy is simple, if it is not insured it is not funded.” “Each debtor, that is each customer funded through Westlake Funding Ltd.’s model is fully credit insured by rated trade credit insurers and the benefit of that flows directly to Westlake and as such to the benefit and security of Westlake’s Investors.”
Market and Investor Demand
Westlake Funding Ltd is offering Investors the opportunity to invest in Westlake’s project by way of “redeemable / convertible Preference Shares that offer a high fixed yield for the duration of the investment term”
Investors have the option to either redeem their investment at the end of the prescribed term, or to convert to ordinary equity in Westlake.
At all times, the funds invested by the Preference Shareholders are used ONLY for funding “credit insured receivables”.
Current Ordinary Shareholders have undertaken to fully underwrite ALL the operating expenses of Westlake.
This means that all operating cost are either paid out of the profits of Westlake Funding Ltd, or out of Ordinary Shareholder Equity, resulting in Preference Shareholder Investments being quarantined and used ONLY for funding credit insured trade finance transactions.
This can often dissipate investor funds and reduce the end value of their investment, this is not the case for Westlake’s Preference Shareholders.
This and other highlights of the investment, have contributed to strong interest In Westlake Funding Ltd.since publishing its capital raising offer on Wholesale Investor.
“Investors can opt for high yield returns at different fixed terms up to five years, with regular, reliable quarterly interest payments and the return of all their capital at redemption”
Mr, Andrews commented, “The initial $10M funding round is only the tip of the iceberg in satisfying the demand for debtor finance businesses already being experienced by the company.” Mr. Andrews
With a combination of, High Net Worth Individuals, Fund Managers, Self-managed Super Funds and International Investors indicating interest, Westlake Funding is positioned to rapidly capitalise on the opportunity of the SME debtor finance sector.