Looking to hammer out a financial deal to secure a medium to large scale offshore project? Talk to the ‘deal maker’ – Greg Fitzsimons of Export Finance Limited (EFL). He’ll not only get the ball rolling, he’ll keep it rolling until the finance is secured and the project completed.
Greg, along with co-director Matt Vyle, are passionate about helping Kiwi exporters and have the specialist skills and experience to ‘make the deal happen’ – rather than have a project stall due to lack of financial backing; a common occurrence in today’s fragile financial environment.
Those skills and experience, and indeed connections, come from their previous association with ABN Amro bank, where Greg worked in the debt team, mainly on structured trade and asset-based finance transactions.
“We closed asset-based transactions for mining companies and large infrastructure projects,” he says. “A highlight was the completion of the first project finance transaction (for a project in Istanbul) utilising New Zealand Export Credit Office (NZECO) support. We also obtained bank and NZECO approvals for a NZ$100 million agri-business project in South America.”
Greg says he enjoys helping the country’s export drive as well as problem solving and believes his success comes down to having the interpersonal and structuring skills to bring transactions together. However, at ABN Amro the client relationship policies were focused on institutions rather than medium sized privately owned corporates.
“Our vision was to be able to talk to all exporters and bring our specialised project financing skills to a wider market,” he says. And so EFL was launched in 2009.
Greg describes their target market as a niche one – primarily exporters with one-off, often complex, projects valued from NZ$5 million upwards, and where a vendor financing package enhances the offering of the exporter. They work with NZECO, which provides a range of services which can effectively guarantee the buyer’s payment and insure against country risk – working through the banks here and in the markets where the projects are taking place.
So where does he see EFL providing the most assistance to exporters?
“It’s in providing that finance arrangement to vendors overseas with credit restraints somewhere in the supply chain – which, in turn, greatly enhances the New Zealand exporter’s offering. It’s assisting the exporter to make the step up from doing say NZ$2 million to $5 million sub-contracts and pitching for greater project roles. It’s accessing bank support – helping export firms get into shape to deal with the banks.”
Greg says their understanding of bank processes and risk assessment, mitigation strategies and financial models all helps smooth the pathway to getting the deals done.
Large agribusiness projects (incorporating NZ farming systems, IP and genetic stock) and marine vessel projects are core sectors that generate business for the company. EFL specialises in assisting with the export of intellectual property and systems into overseas joint ventures (often agribusiness) that allow for a share of long term investment flows to return to New Zealand.
Since launching EFL three years ago, Greg and Matt have put some impressive runs on the board involving specialised construction and engineering projects. EFL arranged the NZECO guarantee that supported the project financing for a New Zealand company interior fit-out of the MV Kay, a Gibraltar-owned mini luxury cruise ship. EFL also negotiated the financing arrangements and lease terms for Marinescape’s recently completed public aquarium in Cleveland, Ohio.
EFL’s work can be complex and challenging. Greg talks of the many ‘moving parts’ to a project finance deal that need to be co-ordinated to get to the day of “Financial Close”.
“We arrange the NZECO guarantee and bring all the parties involved – the buyer, the buyer’s overseas bank, the NZ exporter and NZECO – together,” says Greg. “Many of these export projects are extremely complex transactions that require enormous effort to ensure all elements of the transaction can be aligned at one moment in time to achieve financial close.”
Greg can’t speak highly enough of the NZECO guarantee. “A New Zealand Government funding guarantee is a very powerful tool. Banking is a tough market and there can be a reluctance to lend on new projects. But the guarantee can help stimulate bank interest in considering the whole arrangement.
“By being able to bring the government along to the transaction you can lower the cost of funding for the venture and the exporter can add real value to his offering. You’re walking in the door with a powerful package.”
He says EFL goes into bat for the exporter, arranging the NZECO guarantee and working with the buyer’s bankers. It also provides the project leadership and ensures the project’s financing momentum in maintained. “This lets the exporter get on with the business of delivering the core project elements.
“Complex project finance requires careful preparation, direction and maintained momentum with the financial institutions. Our USP is our successful track record of getting complex transactions completed and delivered.”
Challenge of scale
ESL operates in a niche market, and Greg says the challenge is finding export projects of sufficient scale. The dollar value of single export transactions is usually small. To qualify for NZECO backing, projects need to be on a commercial scale rather than involving just funding for private luxury yachts – which he admits eliminates a big chunk of New Zealand’s boat building activity.
There’re also a couple of mindset inhibitors to achieving the necessary project scale he says. Firstly, many exporters don’t have the risk appetite (or mistakenly think they don’t have the skills) to be project leaders – they’d rather just stay a sub-contractor.
“We’re looking to help those that are prepared to step up and take on management of the whole project. Remember NZECO is backing the buyer or project sponsor to make the payment flows. They’re also underwriting the debt facility during the project’s construction period – which allows exporters to step up to larger projects,” says Greg.
Secondly, there’s a reluctance to pay fees to a project enabler such as EFL – which are sometimes seen as a slice of the exporter’s margin rather than an investment to ensure the project happens. “We try and overcome this reluctance by focussing our fee on the exporter’s successful project delivery rather than charging an hourly rate whether the deal happens or not”.
“Not surprisingly there are exporters who want to do it all themselves. We know of export projects that have been on the table for years – but a DIY approach to financing has resulted in limited interest from the banks.”
Greg says after three years they’re now looking to widen their client base, develop repeat business, and broaden their focus into areas such as assisting with large scale contract performance bonding applications. One thing is for sure, if there’s a deal to be done out there, he’s ready and willing to step up and make it happen.
Glenn Baker is editor of Exporter.
