21.12.2015

New credit line for AFI

UK based access rental group AFI has secured a £70 million refinancing deal from asset based lender PNC Business Credit, to help it accelerate its growth plans in both the UK and the Middle East.

The refinancing deal provides AFI with access to a £55 million asset backed lending facility, alongside a £15 million term loan, providing it with funds for more acquisitions and organic growth. The company made three acquisitions this year and believes that there will be ‘consolidation opportunities’ in the fragmented UK rental market during 2016. It also plans to seek further opportunities to extend its branch network in key areas of the UK and the Middle East.

Founded in 1998 by Malcom Bowers as Aerials for Industry, the business was subject to a Management Buy In by executive chairman David Shipman and Geoff Gibson in May 2002, and now operates a fleet of over 5,000 aerial work platforms from 25 depots across the UK and the Middle East.

The group stepped up its expansion plan following investment by Rutland Partners in May 2013, which brought AFI and Hi-Reach together in the UK and gave the group a significant foothold in the Middle East.
With market value of £85 million the company achieved record revenues of £55 million with Earnings Before Interest, Tax, Depreciation and Amortisation of £19 million last year. With further gains expected this year.

Chairman David Shipman said: “This is a good deal for AFI and will enable us to continue taking advantage of both acquisition and organic growth opportunities as we head into an important period of growth for the group. We have built a great team and, by continuing to focus on providing excellent customer service, we are well placed to grow further in the coming years. Our Middle East operations continue to grow, and with further depot openings planned for early 2016, we remain confident in the medium-term prospects for the region.”

Oliver Jones, partner at Rutland Partners added:“We are delighted with the strong progress AFI has made since our original investment. The PNC facility provides robust backing that will enable AFI to capitalise on further growth opportunities, and we look forward to continuing our partnership with AFI team.”

Paul Beveridge, UK managing director of PNC Business Credit said: “PNC Business Credit was delighted to provide a five year committed facility of £70 million to support AFI in its continued growth plans. We were impressed with the AFI management team's drive and enthusiasm, as well as the quality of the underlying fleet assets and cashflows which underpin the loan.”

Vertikal Comment

We wondered when we might hear from AFI again regarding further expansion plans or take overs, over the past couple of years it has made a steady number of ‘bolt-on acquisitions’ although relatively small, some of these have helped strengthen the business significantly. It has also done a good deal of work to consolidate and improve its core business, and clearly feels that the current environment will generate further opportunities for which it is ready.

Most importantly the company has demonstrated an ability to react quickly to step in and secure such opportunities when they arise. For this it does need a readily accessible credit line.

The company has plenty of scope for organic growth with further investment in particular regions and product areas such as its Wilson truck mounted and spider lift business. This asset based credit line will certainly help provide a decent ‘war chest’ for both. In the meantime it is almost certain that it will also reduce the overall cost of its debt.