LONDON, November 9, 2011 /PRNewswire/ --
Farming and agribusiness in the United Kingdom will receive a significant boost as Agricultural Finance PLC, the UK Group's new financing arm, today announced a scheme to deliver an additional £500m of lending in the medium term financing sector. The additional financing will back farming businesses in England, Scotland and Wales and help them expand agricultural production, take opportunities and improve cash flow.
By issuing Agribonds™, Agricultural Finance PLC will plan to reach its commitment of becoming the largest non-bank financier in the UK agricultural sector by the year 2017, and fulfill an overall 5% share of the £12bn industry.
Peter Sobey, Agricultural Finance PLC's Chairman said:
"The UK Group is committed to supporting agribusiness in the UK and our additional financing will add to the essential flow of capital going in to the sector. Ever since the 'credit crunch' borrowing from High Street Banks has become more difficult to access, whilst the number intermediate lenders has plummeted, this has opened up a gap in supply and demand of required finance, believed to be in excess of £5bn."
"While global demand for food rises along with global population growth, the amount of agricultural land in production has barely increased since the mid-1980s. In some well-developed regions such as the UK, this is resulting in higher land values, producing an attractive underlying business asset. Yet despite farmers being in an enviable position of being able to secure their obligations against this precious asset, farmers have fewer places to turn to, be it for short, medium or alternative financing."
The announcement comes after a concerted effort on the UK Group's part to find new sources of capital finance for its lending programs. Despite no active marketing for the preceding 12 months, the UK Group have been unable to keep up with the increasing demands from new borrowers due to the lack of available finance from traditional lenders.
Bob Mayo, Head of Investor Relations said of the deal:
"Owing to the gap shaped from the recent credit crunch, lending against the security of farmland in the UK may never be as accessible than it is today. By tapping into the capital markets directly, we are able to substantially increase the flow of funds, and finance farmers that would otherwise not get financed."
The UK Group is an experienced lender to UK agribusinesses with a deep knowledge base gained through a number of different models. To date the UK Group has directly lent over £160m, including £30M lent in 2010/2011, and a further £200m placed with other lenders.
Given the gap in the agricultural lending sector, created by the ongoing credit constraints of the UK high street Banks, the UK Group judges the timing as a real opportunity to expand on its successful track record, and increase its market share in the UK agricultural lending sector.
Enquiries to be addressed to:
Bob Mayo, Investor Relations
U.K. Tel +441278772650, Hong Kong Tel +85239738596,
SOURCE Agricultural Finance PLC