THERE are few signs of the global credit crunch putting the brakes on deal activity among Scottish companies this year, according to Scotland's biggest bank.
In the first quarter of the year, RBS Corporate said it completed £400m of deals for Scottish financial institutions and quoted companies. It expects 2008 to be a busier time for these sectors of the economy than last year.
Stuart Heslop, managi
ng director of corporate and institutional banking for RBS in Scotland, said that the difficulties created for some companies by the credit crunch had created opportunities for others looking for takeover targets.
He said: "We've had an exceptional start to the year. Based on that experience and looking forward to what is in the pipeline, I think we'll have a busier time than in 2007."
In its first completion this year, Heslop's division led specialist material firm Low & Bonar's £119.4m acquisition of German group MTX.
Kevin Higginson, group finance director of Low & Bonar, which employs about 180 people in Dundee, said: "The credit crunch might be affecting consumer-facing businesses, but so far it hasn't had any impact on us. We still believe there are big opportunities in the textile and floor sectors and that we can continue to grow through acquisition."
Heslop said there are clear signs that financial institutions are also optimistic. RBS Corporate completed a £75m deal with Herald Investment Trust which wanted to be ready to invest in market opportunities as they arise.
And businesses are particularly active in the north of Scotland, driven by the high oil price in Aberdeen.
Heslop said: "Oil service companies are examining their business models and have the confidence to look for acquisition targets."
While some businesses are "tightening their belts by a notch" and being more cautious because of the credit crunch, Heslop believes this is based on a sense of being ready for difficult times if they arise rather than companies actually being in trouble. "We're not turning down deals," he said. "If a company ticks the boxes of having a strong business model and management team and the acquisition makes sense, then we'll support it."
It is not just large Scottish companies that are pushing ahead with expansion plans despite doom and gloom reports of tougher economic times ahead.
Inverness-based upmarket hotel chain Inverlochy Castle recently acquired the exclusive Rocpool Reserve in the city for an undisclosed sum, with funding from RBS.
Norbert Leider, general manager of Inverlochy, says he plans to add another two to three hotels to the portfolio over the next three to four years.
He said: "I'm constantly looking for other hotels all over Scotland. Where I end up buying will depend on the right properties coming along at the right time."
The full article contains 464 words and appears in Scotland On Sunday newspaper.
