Harris Nesbitt is ramping up its asset-based lending capabilities by extending its branch network with the opening of an office in Los Angeles and is eyeing offices in New York and Boston. Kevin Delaplane, senior v.p., and managing director, said the asset-based lending operation is a national business and Harris wants to put people on the ground, to supplement relationships. "This is a growth business for Harris, with 20-30% expansion in the last two years," Delaplane added, noting Harris expects to continue at this level of increase, though he could not provide figures for a balance sheet increase. There is no timeframe for the further roll out and no specific numbers for the amount of people targeted, he said. Offices have also been opened in Detroit and Atlanta, as part of the national rollout program.
Delaplane said, he has not seen competitors like Bank of America, GE Capital and Fleet Capital aggressively expanding. This is a strategic play for Harris, which expects to pick up considerable business in the traditional manufacturing, distribution and food sectors, he said. Much of the competition has been tightening lending to the middle-market arena and Harris has had good success picking up business, he added. Transaction sizes are up to $100 million and hold levels for Harris are up to $30 million. Spokesman Philip Margolis, Fleet Capital and Marissa Moretti spokeswoman for GE Capital did not return calls. Eloise Hale, Bank of America spokeswoman also did not return calls by press time.
Asset-based deals have done well throughout the economic cycle, but during the tougher environment it enables companies to leverage the assets, explained Delaplane. An asset-based loan can be utilized when the company has tangible or financeable assets that can be used as collateral, such as accounts receivable, inventory, equipment and real estate. These companies may have high leverage ratios, or may be marginally profitable companies or with inconsistent cash flow. ABLs can be a great alternative to cash-flow deals, he said, enabling buyouts or turnarounds.