Asset-based lending outlook

In 2014 we saw demand for asset-based lending increase. Not only did we see growth in our UK portfolio, we saw the UK’s ABL market reach an all-time high. ABL helped companies quickly respond to growth opportunities, while also allowing them to address working capital seasonality. The flexibility of ABL, along with its competitive pricing and fewer covenants, has helped raise its overall popularity and use in the UK.

For 2015, we see ABL momentum continuing. As seen in 2014, we anticipate even more large club deals, with greater collaboration among the lenders and business owners, especially the private equity community. This is an exciting new chapter for our market as the ABL providers are more experienced working together to provide solutions to our customers. For companies with ambitions for growth, this should result in greater access to capital and more certainty to fund their growth.

We also see more collaboration in 2015 between the ABL lenders and the non-bank owned funds that have a lot of dry powder and want to put their money to work. This is a good opportunity for the ABL market to work more closely with these funds.

So far, 2015 appears to be another good year for borrowers and ABL providers to achieve their financing ambitions. Companies will continue to benefit from the core advantages of ABL: greater covenant flexibility, competitive pricing, less focus on balance sheet leverage and debt/EBITDA levels, and higher advance rates depending on the situation. At Wells Fargo Capital Finance, we look forward to working together to help companies tap into this vital form of financing.