Undersea Systems Provider Makes Global Waves
A successful Trade Mission saw Viper Subsea secure a contract and establish a business relationship with Santander.
- Company: Viper Subsea
- Sector: Oil and Gas
- Turnover: almost £4 million
- Bristol-based engineering specialist Viper Subsea designs undersea equipment for the global oil and gas industry.
- Sales are made at the location of natural resources, so Viper’s growth was limited by the expense of meeting clients internationally, until co-founder Neil Douglas heard of the Breakthrough programme and applied.
- As part of the programme, Santander sent Viper on two Trade Missions to Brazil, the first of which helped secure a key order, where the end-user of the equipment was state oil company Petrobras, a turning point for Viper.
- With the relationship established, Santander was able to offer a finance package, which would allow Viper to operate and grow without seeking equity investment.
- The business subsequently took the decision to move its full banking facilities to Santander in 2012.
- In 2013, Viper announced a 60% rise in sales for the closing financial year and its aim is to continue this level of growth.
Viper Subsea specialises in the supply of undersea power, control and chemical distribution systems for the oil and gas industry. Since its launch in 2007, it has established a customer base among major production companies and the contractors who supply hydrocarbon production equipment on its behalf.
Viper designs its subsea products in-house, and they are then manufactured by third parties. “At the moment, we spend about 30% of our revenues on research and development and we currently have about 12 or 13 patents and patent filings,” says co-founder Neil Douglas. “Our products have to be unique.” Sales are focused on regions where undersea oil and gas exploration and production is taking place. “In many cases the end users are the same globally, so if we make a sale in one region that opens the door to others,” Neil says.
Since its launch, Viper has enjoyed an average growth in revenues of around 40% year on year, and in 2013 the company announced a 60% rise in sales for the closing financial year. First-hand knowledge of the key markets and personal contacts with purchasers are vitally important. However, for a company focused on international sales, the cost of visiting overseas territories is expensive, and the process of getting in touch with the right people can be frustrating.
That’s where the Breakthrough programme – and more specifically the Trade Mission initiative – proved invaluable for Viper Subsea. Fully funded by Santander, Trade Missions take fast-growing SME exporters to target markets and provide access to key players such as buyers and distributors.
On a mission
Neil first heard about the Breakthrough programme in 2011 and contacted Santander to find out whether Viper Subsea met the growth criteria. When its credentials had been established, Neil was offered a place on an upcoming Trade Mission to Brazil. “It couldn’t have come at a better time,” he says. “Our first product was a system called V-lock and we had pitched it to a contractor who was working for Petrobras. Through the Trade Mission we were able to meet the contractor and Petrobras.”
The result was an order for the V-lock system. “It was a very significant milestone for us,” says Neil. “I think we would have found it much harder to secure the contract if we hadn’t had the opportunity to go out and meet people face-to-face.” Following the success of this first visit, Viper Subsea took part in another Trade Mission to Brazil in 2012 – again funded by Santander – meeting more potential clients and representatives in the region.
Banking on funding
With a relationship firmly established, Viper Subsea took the decision to re-bank with Santander. As Neil recalls, the migration from the company’s incumbent bank was triggered by two very pressing requirements. “One of our customers was asking for an advance payment guarantee. Another required us to provide a warranty guarantee,” he says.
Both of these guarantees require sellers to set aside cash to provide security for buyers. This is in the event of the vendor being unable to supply goods that have been paid for, or the vendor supplying goods that don’t meet the order specifications.
“Banks see these scenarios as high-risk so it can be difficult to get this kind of funding,” says Neil. “But Santander was very proactive. It took advantage of the government’s Export Finance Guarantee Scheme to underwrite some of the guarantees.”
“We were able to split the risk between ourselves and the government scheme and we were able to offer Viper this finance as an unsecured loan,” says Santander Relationship Director Simon Whyatt. “Viper was then able to provide their customers with guarantees without tying up cash.”
Neil says Viper examined alternative investment strategies, but only Santander offered a package that allowed Viper to retain equity.
“To win the orders we might have had to find another source of finance, such as equity investment, but the package provided by Santander gave us an alternative,” says Neil. Santander also provided a current account, Bacs payment, and foreign currency accounts.
Focus on growth
Viper’s aim is to continue growing at the same stellar rates it has seen for the last few years and the company is currently talking to Santander about further funding to ease any cashflow pressures. “We see ourselves helping Viper to make the jump from a £3 million turnover company to a bigger league,” says Simon.
For its part, Neil has been impressed with Santander’s can-do attitude with regards to understanding the business and coming up with bespoke solutions. “They have put a lot of energy into this relationship,” he says.
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.
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Relationship Director Comments
We’re thrilled to be working with Viper and see huge potential in the company. The knowledgeable management team has long experience in the industry and Viper is highly respected in its field.