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SME lender acquired by CML Group

by Annie Kane5 minute read

Non-bank debtor finance specialist CML Group has officially completed its acquisition of asset and working capital finance company Classic Funding Group.

CML Group, the parent company of Cashflow Finance, has announced that it has completed its purchase of Classic Funding Group (CFG) in a deal that aims to help the group grow market share and expand its service offerings.

The new group will be co-branded with the Cashflow Finance and Classic Funding Group branding and will be headed up by CML Group CEO Daniel Riley.

CFG’s former CEO, Paul Rathbone, stepped down from his role prior to the deal completion.

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Speaking of the reason to co-brand, Mr Riley told The Adviser: The two brands are recognised in the marketplace for their various areas of expertise, so the co-branding will enable the market to recognise that we are able to offer a much broader offering in terms of the types of assets that we finance and the rates that we can offer.”

What the CML/CFG deal entails

North Sydney-based CML Group offers invoice discounting and equipment finance through its subsidiary, Cashflow Finance.

The acquisition of CFG will see its existing $1.6-billion invoice finance portfolio (spanning invoice discounting and factoring) grow by more than $30 million, adding approximately 40 clients and $400 million of annual invoice turnover to CML’s invoice finance portfolio.

CFG’s invoice discounting division is currently financed through a $45-million warehouse facility provided by a big four bank.

As well as building the group’s invoice finance portfolio, the deal will also reportedly see CML expand its equipment finance book as it takes on CFG’s equipment finance division (financed through a separate $130-million warehouse facility provided by a major Australian bank), which has a loan book of approximately $100 million.

The subsumption of CFG’s equipment finance division will take CML Group’s total of funds advanced from $20 million to more than $120 million.

Cashflow Finance’s parent company noted that CFG’s book had a “long history of strong credit performance and well-established channels to market” and would “add critical scale to CML’s business”.

“In addition, the improved funding structure within the CFG equipment finance division brings forward CML’s plan to transition to significantly cheaper funding for its equipment finance product and will enable CML’s equipment finance growth strategy,” the group said in a statement. 

Speaking to The Adviser, the CEO of the Cashflow Finance-Classic Funding Group brand, Daniel Riley, commented: The CFG acquisition represents a significant opportunity for the company as it will underpin our strategy to grow our equipment finance and invoice discounting businesses and will deliver significant synergies.

We are excited by the acquisition and the growth we are achieving organically. We are confident that the acquisition of Classic Funding will stimulate our business even further. 

We entered the equipment finance and invoice discounting businesses over the last two years, with existing management from those fields. Having shown that we can build these businesses from a standing start and having also demonstrated the ability to acquire and integrate invoice factoring businesses, we are comfortable that [this] announcement will enable us to fast-track our expansion to become a large, diversified, secured non-bank lender to Australian SMEs, he said.

Mr Riley added that the newly merged entity will soon be looking to expand its credit and sales team, particularly in the broker-led part of the business, and potentially move premises in North Sydney to accommodate the larger group size.

[Related: Asset finance lender acquired for $260m]

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Annie Kane

Annie Kane

AUTHOR

Annie Kane is the editor of The Adviser and Mortgage Business.

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