GUEST BLOG: Mathew Hughes, Export Finance Manager Wales, UK Export Finance
UK exporters are shaping the world. From cutting-edge new buildings in Sharjah, UAE, to water infrastructure projects in Kurdistan, UK businesses are taking their global export relationships to new heights and building a world of endless opportunities.
And a growing number do this with the support of UK Export Finance (UKEF). UKEF exists to ensure no viable export fails for lack of finance or insurance. That’s why I work with Welsh companies every day to help them pursue new opportunities, markets and growth, as part of UKEF’s network of Export Finance Managers across the country.
With government backed finance and export-related risk insurance, exporters can win contracts and fulfil contracts, guarantee payment and attract overseas buyers – even in new and emerging markets.
Making exports happen
Take for example Hobbs Valve, a market-leading supplier of triple-offset butterfly valves to the oil and gas and marine sectors based in Caerphilly.
Sembcorp Industries, a group listed on the Singapore Exchange, required Hobbs Valve to supply bonds worth 35% of the contract value to secure a £2.2 million deal. While banks are able to issue bonds of this nature, they often require cash deposits from the exporter, so it would have put pressure on Hobbs Valve’s working capital. UKEF was able to provide Hobbs Valve’s bank with a guarantee for 80% of the bond, enabling the company to successfully realise this significant business.
Support for contract bonds
UKEF support also enables exporters to win contracts in new markets. Wales-based NMI UK Ltd is a leading gaming compliance testing and auditing laboratory, with facilities across the United Kingdom, Malta, Italy, Netherlands, Spain and Canada.
In order to win a contract to test and certify the national lottery in a new market, Romania, NMI UK was asked to provide a £225,000 performance bond from its bank in order to secure the business.
This is an unusual requirement for the industry, and for its bank to issue the bond NMI UK would have had to provide cash collateral. UKEF issued a government guarantee to NMI UK’s bank, allowing it to issue the bond and enabling NMI UK fulfil the terms of the contract whilst protecting working capital. Meeting the contract terms in this new market not only opened the doors for further business in Romania, but also set a precedent for more business around the world.
Opening new doors
UKEF works closely with the wider Department for International Trade and devolved Welsh Government to enable UK exporters to access the information and support required to successfully access new overseas markets.
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