Wednesday 8th January, 2014

Despite only a couple of weeks of trading in the period for Tungsten Group (the organisation which was set up on 18th October last year, and which bought OB10), stockmarket regulations have seen them issue their interim "six months" report, released today. In it, the organisation announced that it has established a Heads of Terms Agreement with Blackstone Tactical Opportunities (BTO) worth $200m.

In a conversation OB10 CEO Luke McKeever, he commented that the specific agreement forms a new part of the deal, but was an objective which they were always required to deliver against to supply overflow capital, and also to be able to deliver to global customers quickly. Of course, the added advantage is that if need be, the BTO funds can provide the vehicle which would enable the supply chain finance element of their offering to function, even before the deal with the UK bank is reached; funds which McKeever says will also be offered at the same competitive rates.

There's certainly no doubt that Tungsten got the timing right. A confluence of a number of factors, including a relctance of the banks to lend to SMEs, a tough economic environment and a need for suppliers to gain access to cash, meant that the tail end of last year saw a number of alternative financing offerings from different bodies. And McKeever says that he's happy with both the results of the interim report, and the way the business is developing - which is not only on track to succeed as planned, but is also being well received by customers. With a new spend analytics function planned for the end of this month, the organisation is not wasting any time in getting on with the deliverables.

In fact, McKeever said that he expects the organisation to grow rapidly, in line with expectations, at a growth rate of double digits and that over the next 12-18 months he'd like to see the organisation in profit.

And, all things being equal, the basic facts of the market are likely to prove him right. With results from an IFF Research survey showing that more than a third of the 5 million SMEs in the UK need external capital to help grow their business this year, and with little evidence that initiatives such as Project Merlin, Funding for Lending and the Government’s new Business Bank are actually working, the need to source other financial solutions have become critical for SMEs.

Edmund Truell, CEO of Tungsten Corporation, said: “Growth in the UK is now apparent and there is a clear opportunity to outperform our EU peers, but only if strong corporates which survived the crisis can take competitive advantage. The green shoots of economic recovery need the fertiliser of working capital and the saving available through increased efficiency in the supply chain.”