Growth Capital boost for container design company

Croft Associates

Santander’s willingness to grasp a complex industry proved a crucial factor for Croft Associates in winning a transformational contract

In Brief

  • Company turnover: small commercial business
  • Sector: Radioactive waste material/transport and storage
  • Oxfordshire-based Croft Associates design, develop and license bespoke containers used in the transportation of radioactive material.
  • The company needed to complete the development of its new container design for the storage of nuclear waste material before it could win high-value contracts.
  • In order to assess the risks involved in the business, Martyn Drake, Santander Director of Growth Capital, spent many weeks gaining a thorough understanding of Crofts’ complex industry, their business model and growth prospects.
  • Santander provided a combination of Breakthrough Growth Capital, a Performance Bond and full operational banking facilities based on their analysis of the future growth prospects of the business. In effect, they were prepared to offer bridge finance for new container orders. This allowed the company to complete its development work without relinquishing an equity stake.
  • Thanks to Santander, Croft is now in a position to secure significant new orders worth many millions of pounds, transforming the business over the next few years and creating an estimated 20 new high-value jobs.

Established in 1980, Oxfordshire-based Croft Associates designs, develops and licenses bespoke containers used for the transportation, storage and disposal of radioactive waste.

The long-term disposal of nuclear waste from the UK’s power stations is a key issue within the industry, one that the Nuclear Decommissioning Authority is keen to address. A few years ago, Croft began looking at ways of tackling the issue and started to design an innovative and cost-efficient storage container based on shielded technology.

These containers required extensive – and expensive – development and testing. Nevertheless Croft began work to develop a range of containers designed to meet the needs of the UK market, which could potentially transform the company, as Croft CEO Clive Beattie explains. “We are one of four companies signed up to a framework agreement with Magnox, under which up to £200 million of containers can be acquired once fully developed.”

Drilling down

As a business employing around 25 members of staff, Croft was financially constrained and needed a significant financial injection. “We were attracted to Santander’s Breakthrough Growth Capital by the fact that it didn’t involve equity and left you alone to focus on the business,” says Clive, who soon met with Santander’s Martyn Drake, Director of Growth Capital. “Martyn spent considerable time in both meetings with us directly and, as things progressed, talking to customers and so on. He was asking questions at a level and depth we’ve never had from any of our banks previously.”

Overall, Martyn spent three months learning about the complexities of Croft’s market. “It’s a lot of information and a difficult business to get to grips with,” says Clive. And, as Martyn himself explains, “It was a lot of time learning about the market and not just the finances of the business. We had to be sure the orders would come in.”

A convincing proposal 

The challenge for Martyn was to justify lending to a business with few assets, and contracts that were yet to materialise. “When Croft came to meet us they already had government approval for an empty container design,” he says. “But they needed to finance further licensing work before any of the major nuclear waste owners would provide them with orders.”

Convinced that Croft’s proposal could pay off, Santander agreed to provide the required facilities in full. “We bridged the orders,” says Martyn. “Traditional bank finance would typically lend to a company of this size against a firm order book or other tangible security. In this particular case, the company needed finance to fulfil the orders, and a loan based on future cashflow was the only attractive option for them. Where Santander Growth Capital is different is the time we take to properly understand the business and to take a pragmatic approach to the risks involved.”

The deal has enabled Croft to commit the necessary resources to undertake the required licensing work and then manufacture and deliver containers for use. This represents a milestone in the company’s history that will transform it over the next few years, creating a further 20 high-value jobs.

So, did the level of service from Martyn and the rest of the Santander team impress Clive? “Much more so than in dealings with other banks,” he says. “With other banks you can come away feeling that they’re providing a product or service that’s a fairly standard thing and there’s not much relationship or exploration around it. Here, the difference was trying to understand the business.” 

All lending is subject to status and lending criteria

What is Breakthrough? 

Breakthrough is a programme of funding, business support, events and consultancy to help high-performing small and medium-sized enterprises (SMEs) leap to the next level of sustainable growth. Taking part in Breakthrough does not guarantee access to all elements, as each programme is tailored to meet the individual requirements of the business. To find out more, register your interest, and to see if you are eligible, visit the Breakthrough website:
www.santanderbreakthrough.co.uk

All lending subject to status.

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Relationship Director Comments

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Traditional bank finance would typically lend to a company of this size against a firm order book or other tangible security. In this particular case, the company needed finance to fulfil the orders, and a loan based on future cashflow was the only attractive option for them. Where Santander Growth capital is different is the time we take to properly understand the business and to take a pragmatic approach to the risks involved.

Martyn Drake, Director of Growth Capital