UK Export Finance (UKEF) has kicked off its direct lending facility (DLF) programme by supporting Carillion with a £68mn buyer credit loan.
The loan under the DLF, designed to help overseas buyers purchase goods and services from UK exporters, has helped support the British construction services company secure a £75mn contract, which will see the company develop phase 1 of the Dubai World Trade Centre.
Carillion has previously been supported by UKEF’s standard buyer credit facility in attaining contracts in the Middle East, but through this latest deal the Wolverhampton-based group has attained a £34mn loan from the credit agency.
Deutsche Bank, one of the members of the inaugural DLF panel, arranged the loan and is providing a further £34mn of funding, guaranteed by UKEF, to Carillion.
“We are delighted to be the first bank to partner UKEF under this exciting new scheme,” says Simon Sayer, head of structured trade and export finance, Emea at Deutsche Bank.
Announcing the deal on a visit to Birmingham on Monday, UK chancellor George Osborne said in a statement: “It is great to see successful companies like Carillion winning contracts around the world. Today’s deal, the first in a pipeline of many, will help us reverse the age old trend of not exporting enough.”
Carillion was awarded the contract for phase 1 of the 146,000 square metre Dubai Trade Centre development in March 2014 and completion has been scheduled for Q3 2015.
“I’m delighted to announce the first deal supported by UK Export Finance’s direct lending facility along with the 20 financial institutions that are going to help us deliver the loans,” Osborne added.
Commenting on the deal, Richard Howson, chief executive at Carillion, says: “This is a significant and very important contract for Carillion, which will help us to build on our success in the Middle East and make further progress with our strategic objective of growing our business in the region. The direct lending facility is a major new development that is providing us with the support we need to achieve our export goals.”
DLF panel of partners
In line with Carillion’s inaugural deal, the UKEF unveiled the names of the 20 financial organisations appointed to its DLF panel of partners, which will help deliver £3bn of loans to UK exporters.
The members of the inaugural DLF panel are:
• Bank of China
• Barclays Bank
• Crown Agents Bank
• Deutsche Bank
• Ecobank Nigeria
• HSBC Bank
• Investec Bank
• JP Morgan
• Lloyds Bank
• Northstar Trade Finance/Sovereign Star Trade Finance
• Société Générale
• Standard Chartered Bank
• T. Garanti Bankasi
A UKEF spokesperson tells GTR that all the partners “satisfied demanding criteria covering the capabilities and expertise in arranging and administering specialist export credit finance”.
“The news that UK Export Finance has approved the first loan under the direct lending facility is certainly welcome,” Geoff de Mowbray, CEO of Dints, says to GTR. “We hope that this will pave the way for more lending to a range of companies, including SMEs, who have the potential to export products and services.”
Under the DLF, UKEF will provide loans to overseas buyers in order to finance the purchase of goods and services from UK exporters. Loans are available to cover new international sales by any business exporting from the UK, to any country where UKEF medium-term cover is available, and can be made in pound sterling, US dollars, euros or Japanese yen.
Commenting on the SME segment, de Mowbray adds: “The key to making the programme accessible to these companies could lie in an aggregation strategy to provide access at the same time as meeting UKEF’s product application criteria.”