AUSTRALIA’s leading livestock funder, StockCo, has negotiated a three-year, $150 million securitisation facility with Goldman Sachs.
The new facility will provide a more efficient funding structure for StockCo and a platform to fund future growth in StockCo’s business.
Group managing director Marcus Kight said the company saw Goldman Sachs’ decision to come on board as the company’s major funder as an acknowledgment of the important role StockCo played in financing Australia’s livestock industries.
Since its formal establishment in 2015, StockCo has funded the purchase of more than $1.4 billion worth of cattle and sheep, by 1500 customers all over Australia.
“Drought conditions have impacted our rate of growth in the past 12 months, however we continue to acquire new customers on a daily basis and we are excited about the growth opportunities that will arise as seasonal conditions improve,” StockCo Australia chief executive CEO Richard Brimblecombe said.
“The fundamentals for Australia’s livestock industries are very positive,” he said.
“Our national cattle herd and sheep flock are down due to tough seasonal conditions over the past 12 months in Victoria and NSW and longer in parts of Qld. At the same time demand for high quality Australian meat and wool continues to grow.”
“This will be supportive for prices in the foreseeable future and with a return to more positive seasonal conditions, StockCo has a major role to play in helping Australia’s livestock producers access the capital they need to maximise returns from their agricultural assets” Mr Brimblecombe said.
StockCo’s livestock financing model is unique and has been specifically developed with Australia’s livestock producers in mind.
The company works with its customers to establish an approved revolving livestock purchase limit. Once the limit is approved and documented, StockCo’s customers are able to purchase livestock without having to fund the upfront purchase cost of those livestock.
Some unique aspects of StockCo’s livestock funding facility are:
- Customers select the livestock best suited to their operations and circumstances.
- StockCo funds 100pc of the GST-inclusive purchase price of approved livestock and settles the entire purchase invoice directly with the vendor or the vendor’s agent.
- StockCo carries the finance costs through until the agreed sale date, meaning there is no debt servicing requirement to be met by the customer.
- Customers select the optimum sale market for the livestock and may sell direct to a processor or via their preferred livestock agent.
- When the livestock are sold, StockCo receives the entire sale proceeds, and pays the profit to the customer after deducting the purchase price and finance costs.
StockCo takes direct security over the livestock it funds via ownership of the livestock and registration on the Personal Properties Security Register. This ensures the existing relationship between StockCo customers and their bank is not disrupted and the customer’s ability to service their existing bank debt is enhanced, as they have the ability to generate incremental income from their existing agricultural asset base.
The Goldman Sachs facility announced today was the first securitisation warehouse transaction in Australia consisting of financing receivables primarily secured by livestock, Mr Brimblecombe said.
“The completion of the transaction marks an important step for innovation for the agricultural financing sector,” he said.