S&U secures £600m securitisation facilities to replace £330m existing funding

UK motor and property finance group S&U has secured two securitisation facilities providing up to £600m of funding, replacing its existing £330m credit arrangements with a larger, lower-cost structure intended to support substantial growth in receivables.

The facilities, announced on 27 October, have been arranged with two unnamed Tier 1 UK financial institutions and carry an initial three-year term.

Of the total, £350m will be available to Advantage Finance, S&U’s motor finance business, while £250m will support Aspen Bridging, its property finance subsidiary.

The new arrangements replace the group’s existing facilities in full, including a club financing arrangement that was approaching renewal in 2027.

The refinancing provides £270m of additional potential funding capacity compared with the previous £330m arrangements, while management expects improved interest rates and advance rates to reduce financing costs and strengthen lending economics.

S&U said the facilities are non-recourse to the group for commercial risk, although the announcement does not disclose the complete securitisation documentation or the contractual allocation of losses.

The two facilities have been structured in broadly similar ways, but Advantage’s arrangement includes a balance-guaranteed swap that will provide hedging as receivables are pledged.

Advantage will also retain a separate revolving credit facility of up to £25m to provide additional funding flexibility.

For specialist financiers, the transaction illustrates the importance of funding structures that can expand with an underlying receivables portfolio without requiring successive negotiations over conventional bank borrowing limits.

Securitisation allows financing to be organised around eligible pools of financial assets, potentially improving funding efficiency where receivables performance and collateral eligibility can be demonstrated consistently.

S&U had previously outlined its planned securitisation programme, but the latest announcement confirms that the replacement facilities have now been secured.

Chairman Anthony Coombs described the financing as potentially the group’s most significant development in two decades.

Management believes the new structure could support a near-doubling of receivables by 2030 while improving net interest margins. That remains a growth target rather than an achieved expansion.

Although the company confirmed improved interest and advance rates, it did not disclose their precise levels or identify the two funding institutions.

The new facilities materially change S&U’s financing position by replacing existing borrowing arrangements with larger securitisation-backed capacity, giving its motor and property lending businesses greater room to expand without drawing the entire amount immediately.