Taking stock of cash flow

“Our customers are predominantly small and medium-sized businesses that require regular loans to keep their day-to-day business dealings afloat,” describes President Arben Bora. “A typical customer sector is agriculture, in which there is a significant delay between investment and return. Farmers can never predict with complete confidence how large the harvest will be or how high the market price for their produce will be when it is finally time to sell. We provide the means to tide them over until then.”

A good example is the wine industry. A barrel of wine that is laid down today will not be ready to sell for at least five years. For the winegrower, it represents an asset that he cannot yet realize to fund his ongoing activities. Auxiga is usually called in by the bank in such cases to audit the asset, in this case the quantity of wine, against which the bank will issue a loan.

It is also Auxiga’s job to monitor the asset continuously throughout the lifetime of the loan. “It doesn’t matter what the asset is,” explains Mr. Bora. “What is important is that the asset remains in the possession of the loan recipient. That is why we visit customers regularly, and thereby get to know them and their businesses very well.” It is this expertise that has allowed Auxiga to grow strongly in recent years.

The company was originally founded as Warrant Group in Belgium in 1919. It set up a subsidiary in France called Auxiga. However, this company grew faster than the Belgian parent, which is why the group headquarters are now in Paris. Today, the company is organized as a group of five companies, of which Auxiga Group International is the parent. In addition to Warrant in Belgium and Auxiga in France, the group also includes Sofigarant, which was acquired in 2014, and Auxicontrol, which was set up in 2008 to monitor stocks in the automotive industry. The most recent addition to the group was the acquisition of Eurogage this year.

Today, Auxiga Group International employs 170 people across its five subsidiaries. Most are active in France, with just 15 employees covering the Belgian market. “We are a service company and need to be close to our customers to carry out our work,” notes Mr. Bora. “Our company hierarchy is very decentralized and involves almost continuous customer contact to guarantee the best service.”

Auxiga’s core activity is asset pledge and asset monitoring. Here, it is not the value of the asset that is assessed but the quantity. Nevertheless, Auxiga does act in an advisory capacity on the basis of its experience. “When we visit clients to check on assets, it is mainly a question of taking inventory,” outlines Mr. Bora. “However, in the future our target is to be more than just bean counters. We have operated in this sector for such a long time that we have the expertise to provide advice that goes beyond the numbers. We know certain industry sectors very well indeed.”

Auxiga generates 80% of its turnover in just eight industry sectors. These cover commerce and distribution, retail, wine and spirits, the food industry (specifically ham and cheese), and the automotive sector. “Our customers are often active in sectors with a seasonal component,” says Mr. Bora. “For example, chocolate manufacturers generate most of their turnover at the peak periods of Easter and Christmas although they manufacture steadily throughout the year. An exception is automotive manufacturers on whose behalf we carry out floor checks.” Many of Auxiga’s customers make regular use of its service, and some have been clients for over 30 years. These are usually short-term projects that last for six months, after which another six-month contract is signed.

Over the years, Auxiga’s customer base has expanded beyond banks to include other credit institutes such as leasing companies, private equity companies and investment funds. Its focus nevertheless remains on the French-speaking parts of Europe, currently France, Belgium and Luxembourg. “We operate in a specialist niche that is not particularly widely known,” says Mr. Bora. “That is something we want to change in the future.” Other plans for the future of the group include expanding its floor check activities geographically. “Many of the car manufacturers we work with have dealers across Europe,” Mr. Bora adds.

“Our goal is to provide the same service for all of their affiliated dealers, whichever country they operate in.” Another target is to increase the customer portfolio. Auxiga currently has around 2,300 customers. The overwhelming majority are SMEs with a turnover of between one and five million EUR. “We want to expand our activities to much larger companies in the future and will be targeting companies with annual turnover in the region of 50 million EUR,” Mr. Bora concludes.