CML Group has entered into a binding agreement to purchase Skippr Invoice Finance in its latest plans to expand its reach.
CML Group, the parent company of Cashflow Finance and Classic Funding Group, has entered into an agreement with online invoice finance platform Skippr for an initial payment of $2.25 million (via a mix of cash and scrip). Should all earn-out hurdles be met (said to be set at “a substantial multiple of current funding volumes” over the next 2.5 years), this will gain a maximum transaction price of $6.5 million.
First founded in 2015 by former NAB corporate agri-banking banker Alistair Lamond and former HSBC Hong Kong fund manager Patrick Crivelli, Skippr started as a cash flow management tool and debt finance solution.
Having changed ownership in 2019, Skippr is now an online invoice finance platform that integrates with a client receivables book by accessing accounting technology, such as Xero or MYOB, to provide “transparency over new invoices and efficient approval for funding, simple and automated payment reconciliation and real-time oversight of account transactions”.
Its new platform launched in beta form in October 2019 and has so far onboarded 25 clients.
The current loan book sits at $1.2 million.
According to CML, the acquisition will enable the group to access smaller clients (with receivables books below $200,000) profitably and “improve client retention through a better and more automated user experience for existing and new clients”.
Following completion of the acquisition, CML will combine the online Skippr platform with its current Cashflow Finance and Classic Funding Group offerings to launch an expanded product.
Daniel Riley, CEO of CML, said: “The acquisition of Skippr brings forward our technology development by two years. We see this as extremely important as Australian SMEs begin to source alternative working capital facilities such as invoice financing as they start to come out of COVID-19.
“We have been pleased with the recent rebound in performance in June, which has continued in July, and our ability to offer more automation, which will enable us to service smaller clients while providing our existing and future clients with a better customer experience, will be important to maintain the growth we expect over this and future years.”
The Skippr agreement is the latest deal the SME finance group has entered into recently. Earlier this year, CML was set to merge with debtor finance specialist Scottish Pacific; however, the two groups terminated their scheme of arrangement by mutual agreement in May.
Speaking to The Adviser at the time, Mr Riley said the “circumstances had substantially changed” in the two months since the agreement was signed, with “COVID-19 trade conditions influencing everyone’s thinking”.
He added that this had meant that Scottish Pacific had turned into “an unwilling bidder looking for angles, contractually, to discontinue with the transaction”.
Grow Finance acquires AIF
As well as the CML/Skippr acquisition, SME lender Grow Finance Group has also announced that it has acquired an invoice finance lender.
Grow Finance Group - which offers SME finance products including trade finance, invoice finance and asset finance - has acquired debtor finance provider Australian Invoice Finance Limited (AIF).
The non-bank lenders agreed to the transaction in early March 2020 and the deal has now reached completion.
AIF’s employees will now join the Grow team, however Australian Invoice Finance will continue to operate under its own brand for the time being. AIF's managing director, Greg Charlwood, has left the business by mutual consent.
With the merger with the AIF team, Grow Finance now has expanded its staff numbers to approximately 50 people.
“Grow is delighted to welcome the AIF team and to add this important SME finance product to our existing and prospective client base,” Grow Finance co-CEO Greg Woszczalski said.
“Improving the client experience by having a central point to provide funding for their business needs, reduces the number of applications required and allows speed of getting the funds in our clients’ accounts,” he added.
The acquisition marks the second such transaction the Grow Finance Group has undertaken in the last year, after acquiring the Eclipx Commercial business in September 2019.
Co-CEO David Verschoor noted that “providing more lending products [for] existing and prospective clients” was a key driver to the group’s expansion.
[Related: ScotPac and CML merger off the table]