Issue: Apr 2013


TRICORN MOVES TO HSBC AS IT PREPARES FOR INTERNATIONAL GROWTH



by James Hilton

Worcestershire-based engineering group Tricorn PLC has moved its full business banking to HSBC to support its growing international operations. The company has secured a £10 million finance facility with HSBC, which includes a significant invoice finance line and working capital facilities.

In addition, the AIM-listed tube manipulation specialist has opened a Renminbi (RMB) currency account with HSBC to support its manufacturing plant and growing trade in China. The new account will enable the business to make and receive payments in the country's local currency, helping it to build stronger relationships with employees, distributors and local suppliers.


Tricorn acquired a US-business in March this year to establish a foothold in the North American market and recently commenced operations at its Chinese manufacturing plant. It plans further international growth in both North America and Asia through either acquisition or establishing manufacturing facilities. Headquartered in Malvern, Tricorn now employs around 400 people and operates through five brands: MTC, Redman Fittings, Maxpower, Franklin Tubular Products and RMDG Aerospace.

The company was seeking a banking partner across all three continents and has moved its banking to HSBC’s South West Midlands International Commercial Centre in a deal led by Senior International Commercial Manager Emma Hallam.

Tricorn established the RMB account initially to make payments in relation to the development of its manufacturing site in China, but will also look to trade with its Chinese suppliers using RMB going forward.

Recent research from HSBC shows that UK businesses trading with their Chinese counterparts in RMB are likely to receive improved pricing or terms of trade. The research, carried out amongst HSBC corporate customers in mainland China, found that half (50%) of businesses are willing to offer a discount to companies providing payment in RMB. Four in ten (41%) said they were prepared to offer a discount up to 3%, with a further 9% willing to consider even larger discounts for settling trade in RMB.

Tricorn Finance Director Phil Lee said: “We currently exchange Sterling into US Dollars to pay for our goods in China but we plan to start dealing in the local currency as we believe we can secure more favorable terms with suppliers. We are currently quoted in US Dollars but we really want to get under the pricing and to see what we could achieve by trading in RMB.”

He added: “Over the past 12 months we have developed from a UK centred group into one which now operates over three continents. This internationalisation will continue so we wanted a banking partner that could support our needs across these distinct markets with just one main point of contact. We felt HSBC was the best fit for this requirement and Emma Hallam has helped us establish local banking arrangements with the HSBC teams in China and the US.”

Emma Hallam, HSBC Senior International Commercial Manager, added: “Tricorn supplies worldwide markets in the energy, utilities, transportation and aerospace sectors so the company has naturally been expanding internationally to ensure it best serves its customer base. HSBC’s international footprint makes it a logical banking partner and I am pleased the company has moved its business banking to us.”

She added: “We believe RMB will become the world's third largest currency, due to the growing economic importance of China, and I would urge any business that trades with China to consider opening an RMB currency account. Our research showed that half of all Chinese businesses are willing to offer a discount to companies providing payment in RMB, which could not only have a material impact on UK businesses’ cost of trading, it will also help to forge long-term relationships.”

Midlands based leading law firm Harrison Clark acted for Tricorn handling the US element of the deal. Richard Wilkey, Partner at Harrison Clark, said: “We were delighted to manage the US part of this deal from the UK and via one of our alliance firms, a transaction that turned out to be more complex than everyone originally envisaged. Our team has in-depth sector knowledge and excellent experience of handling international deals. I am really pleased for Tricorn, as the acquisition really reinforces their international expansion.”

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