One of Australia’s leading finance houses, Wingate Group, has acquired a significant portion of SME financial services provider Fifo Capital Australia.
It is hoped that the new round of investment will allow Fifo to increase its offering to SMEs, especially those that are suffering in the post-COVID environment.
“Wingate is one of the leading finance and investment houses, and we have a complimentary suite of other products in real estate, corporate and consumer debt,” said Kevin Wunsh, Managing Director of Wingate’s Corporate Investments. “In that suite we have a consumer lending business, Now Finance, we’ve also launched a residential mortgage business, Orde Finance, and we see Fifo as one of those pillars that provides us with the ability fund small and medium businesses in ways that the current market isn’t satisfying.”
“We see Fifo as a potential pillar to complement our existing suite because we see that there’s a large underserviced market for providing debt to businesses in that small to medium space and needing working capital solutions. Fifo provides a very good product that, over the last 18 months that we’ve worked with them, we’ve seen as being quite compelling in terms of providing working capital solutions particularly in this COVID-19 environment.”
Wunsh added that Fifo could offer something that Wingate were not previously able to, and could plug a demand in the market.
“Consistent with our broader business at Wingate, if I look at both the property business and the corporate business, which I run, we’ve seen increased regulation in the banking system. The Royal Commission had an impact there as well,” he said.
“As a consequence, there has been a pullback, some of the larger Australian banks have retreated and don’t have the ability to provide flexible capital in a timely manner. What has happened is that there has been a shift in supply and demand. If we then look at the impact of COVID, we’ve seen an increase in the number of companies that are needing working capital solutions to manage them through the difficult times of the pandemic.”
“There’s a massive distortion in the marketplace where there’s fewer suppliers of capital but an increase in demand. Our view is that if we can provide solutions, whether debt capital or even equity, we’re going to be able to bridge this big gap that exists in the marketplace because there are very few alternative lenders, particularly in the corporate investment space. “
