Cashflow finance specialist CML Group Limited (ASX: CGR) has entered into an agreement to purchase 100% of the shares in Classic Funding Group (CFG) for $11 million. The deal will be funded by a new $25m facility and CML’s existing equity on balance sheet.
CFG is an Australian owned financial services company with over 25 years’ experience in providing asset finance solutions to a broad range of customers across both equipment finance and invoice discounting.
CML CEO Daniel Riley said the addition of CFG’s client base and experienced staff will bring forward CML’s strategy to build volume in invoice discounting and equipment finance.
“The CFG acquisition represents a significant opportunity for the company as it will underpin our strategy to grow our Equipment Finance and Invoice Discounting businesses and will deliver significant synergies,” Mr Riley said.
“Consequently, we anticipate the acquisition will be EPS accretive in FY’20, with additional synergy benefits to be delivered in FY’21.
“We are confident that the acquisition will stimulate our business even further and have been looking at Classic Funding for some time. Following an extensive due diligence process we are confident that the synergies will be easily achievable.
“We entered the Equipment Finance and Invoice Discounting businesses over the last 2 years with existing management from those fields. Having shown that we can build these businesses from a standing start and having also demonstrated the ability to acquire and integrate Invoice Factoring businesses we are comfortable that today’s announcement will enable us to fast track our expansion and drive shareholder value as we have demonstrated over the last 5 years. It will also position us as a more diversified secured non-bank lender to Australian SME’s.”
The CFG acquisition, which is conditional on consent from CFG’s funder to transition its warehouse facilities to CML, is expected to be completed by mid-October 2019