Gordon Brothers’ Expansion in Australia
By Eileen Wubbe | Originally published in The Secured Lender
Gordon Brothers, the global advisory, restructuring and investment firm, continued expanding its presence in Australia with the opening of a Perth office in January. The office is led by equipment valuation and auction industry veteran, Ben Gibson and will support the firm’s increasing activity across Western Australia. The Perth location is the third Australian office opening in two years for Gordon Brothers, which entered the market in 2017.
The Secured Lender caught up with three of Gordon Brothers’ Australian executives who discussed the potential for ABL in Australia and the firm’s plans moving forward.
TSL: Please provide some information on your background. What attracted you to this new role overseeing Gordon Brothers’ Perth office?
Ben Gibson: I’m a career auctioneer and valuer and went to auction school in Billings, Montana, way back in 1996. I was working for an auction and appraisal company called Century Services, and I worked in Canada for a while and then came back to Australia and secured a position at a company that went on to become GraysOnline. They’re still quite an active participant in the Australian auctioneering market and I worked with them for about 15 years. Over the last four years, I worked for a company called Tiger Asset Group, which was partly owned by Tiger over in the U.S. Finally, about a month ago, I joined the team at Gordon Brothers, which I’m very excited about.
There’s certainly plenty of opportunities here. I have known and worked with several of the Australian-based Gordon Brothers employees over the years, and I was quite impressed as I’d come up against them in a few deals that we were bidding on when I was at Tiger. Part of what attracted me to this role was that I was very impressed at their ability to move capital quickly and the strength of some of their relationships that they had with clients around the country. In Western Australia, I could see that the service offering that they had was going to be a pretty powerful force in the market in the mining and transport sectors here in Western Australia.
Tim Stewart: This was a key opportunity for us to bring the experience and knowledge that Ben has in the auctioneering and valuations sector, and to utilize it to support and drive the financing and the asset-based lending. He has the network, commercial and company understanding and asset knowledge to be able to structure for the financing side, as well as the other products that Gordon Brothers offers to Western Australia-based clients.
TSL: With the Perth location being the third Australian office opening in two years, it’s clear Australia is ripe with activity. What can be attributed to the growth of ABL in Australia?
Matt Aubrey: We’re really just adapting to the broader Australian market, so Perth was a logical next move for us. A number of the investments that we made in the last two years have been in Perth and they’ve been across the retail, mining, construction and transport sectors. So it’s very important for us to be in Perth servicing the market on the ground where many of these industries are concentrated.
Australia is a very asset-rich country and specifically in the mining and transport sectors. So taking what we’ve been able to in the U.S. over many years and now adding that expertise to what Ben brings and the business we’ve built in Melbourne and Sydney, it’s a perfect growth trajectory that allows us to provide the asset solutions and financing that’s needed in the region. That’s the reason for Perth and our growth throughout Australia in accordance with the market needs.
TSL: Are you still seeing the growing recognition in the restructuring and acquisition markets in Australia, in part given the increasing volume of offshore players and the flexibility asset-based lending can provide?
Stewart: Yes, absolutely. The ABL product, as those in the U.S. think of it, is not really that prevalent here in Australia in the same way. The market here has leaned more on vanilla asset finance. But, with Gordon Brothers bringing that ABL product, adapting it to meet local needs and nuances, we are seeing that it is a very flexible and applicable tool. Particularly when you start to get into the more stressed end of the credit spectrum, when you really need to be taking more of a view on the equipment as the driver for debt capacity rather than it simply being some additional security that gives you a bit of extra comfort, but with credit and credit profile still being the main drivers.
So, by doing that flip in approach, we are finding there is a lot of interest and a fairly reasonable level of demand. I think we’ll see more people adopting the ABL product. I think it’s structured well; it’s a very relevant and applicable tool for the Aussie market and, as Matt said, we are such an asset-intensive market that there will be many people who will be able to leverage off it.
TSL: What are some additional opportunities you’re seeing for Gordon Brothers that are unique to the Australian market?
Aubrey: We’re seeing an unprecedented change in business at the moment, and that’s probably two-fold. Infrastructure projects are gearing up and there’s an opportunity to do more building, which requires cash and people that understand assets. That’s one material change. The companies that are asset rich but cash flow poor need support. Having the ability to help businesses reorganize their assets and better leverage them is a big thing for us, and them. We understand the value of the assets in the market, so that is a big change because that hasn’t previously existed. Having one company that can offer capital solutions while also offering asset advisory solutions is a big thing here. And that’s across all sectors – retail, transport, mining and construction. It’s a great opportunity for Gordon Brothers.
Gibson: Particularly from a Western Australian perspective, we’ve had a number of years over here where the mining sector kind of came to an end of a fairly large boom. So there were some years of downturn, but coming out of that, the last 18 months we’ve seen an uptick in some new projects, particularly around new iron ore developments and lithium mining. That has a follow-on effect to a lot of the mining services providers. Some of these guys have been through some pretty tough years. They’ve come out on the other side and have some good contracts, but, because of their credit history or credit rating, they are excluded from or they’re finding it difficult to get finance from traditional bank lenders. And that’s where I think there are some really good opportunities for Gordon Brothers, particularly here in Western Australia, but also across the country. We’re able to provide much-needed funds to take advantage of some of the new opportunities and contracts that are out there.
Stewart: I think one of the other areas to mention is retail and retail lending. In Australia at the moment, not unlike many other parts of the world, the high street is severely challenged. There is a lack of interest in financing retail from many mainstream lenders here. But, given our other business lines and our knowledge of inventory and inventory valuation, combined with our lending appetite, it does mean that we’re probably one of the few people around at the moment who is keen to expand our retail lending base, rather than reduce our portfolio here in Australia.
TSL: What are some goals in the coming years?
Stewart: With Perth having only launched a little over a month ago, from a regional perspective, a major short-term goal is to support Ben in developing and growing that business and getting that firing alongside the rest of the offices that we have here in Australia.
In the medium term, Queensland is another extremely asset and inventory rich state. We have a lot of great relationships there and also want to increase our representation. Given the size and span of Australia, it’s somewhere we should be more prominent in, over time.
Also, Australia is a very close trading partner with Southeast Asia, and there is a lot of inbound and outbound activity between here and most jurisdictions across that region. So that is another region that we’ll be looking at over the course of the year. We’ll be assessing lending and the other business lines that we have, and what the opportunities might be, and how we may approach that region and grow there, leveraging from the Australian-base.
Aubrey: Of the regions that Tim mentioned, we’re currently operating in them, we just don’t have boots on the ground, so to speak, so that’s the main focus. We’re transacting in Southeast Asia now, and Queensland, and we’re also doing work across the ditch in New Zealand.
The thing about our business, is it’s so adaptable, so as the market changes, we change. As the lending environment changes and there’s a need for capital, we adapt. So I think to follow-up on what Tim was saying, we’re extremely flexible in what we offer to the asset rich businesses or institutions we’re dealing with, and that’s certainly where our focus is.
TSL: When you’re not busy working at Gordon Brothers, what do you enjoy doing in your spare time?
Gibson: Over here in WA we’ve got sensational beaches and lovely wine areas to go and visit. My wife and I have five teenage kids between us so that keeps us pretty busy, and, if there is any leftover time for me, I try to squeeze a little exercise in, some boxing and running and that sort of thing. There is plenty to do outdoors here in WA. In Perth, we’ve been having a run of beautiful sunshine most days.
Stewart: Not dissimilar from Ben, as a migrant from 12 years ago, to come from the cool, gray climes of England, the one thing you certainly do with your time off in a country like Australia is appreciate and enjoy the outdoors and the weather. It has an amazing ability, if you can finish on a Friday evening and switch off to some degree for the weekend, to allow you to properly recharge and feel like it’s like a mini holiday on a Saturday and Sunday, especially at this time of year. You can come back on a Monday morning certainly feeling more refreshed.
Aubrey: With a young family, life’s busy. I spend most of my spare time with them, which I love. I also enjoy horse racing, rugby, cricket, and wine and, of course, the beach, pretty well all of the good things that Australia has to offer.