Finance specialist enters Scotch whisky sector with £100m fund

Ferovinum, founded by finance specialists Mitchel Fowler and Daniel Gibney in 2018, have launched into the spirits market in Scotland backed with £100 million of institutional capital.

And the owners have drafted in Scottish drinks industry veteran Gregor Mathieson to lead the operation in Scotland as director of spirits.

Scotch whisky distillers Adelphi and The Glenturret, the oldest working distillery in Scotland, have been using the company’s funding model on a pilot basis. The model is designed to allow distillers to secure immediate funding against casks of Scotch whisky, which are typically held in maturation warehouses for long periods before they are released for sale. Spirit distilled in Scotland must be aged in oak barrels for at least three years before it can legally be sold as Scotch.

Expanding on the company’s decision to move into the whisky industry, Mr Fowler told The Herald that the sector was “both a big market and capital intensive”. He added: “It is a market that our service is very well suited to, but it also has a fantastic export market as well.”

Mr Fowler said his experience of the commodities market suggest the Ferovinum model would help distillers “large and small” but for now is focused on working on the “innovative growth part of the market” occupied by distillers, independent bottlers and brand owners, such as Glenturret and Adelphi.

He added: “We really see the service as being valuable for new and innovative, fast-growing businesses, and over time… will be equally useful to the larger end of the market as well.”

Asked why distillers would work with Ferovinum instead of existing finance providers, he said its solution is flexible and can be “tailor-made” to suit the “life cycle” of individual products.

“It is usually a very long-term relationship,” Mr Fowler said. “Ultimately, we’ll be funding their inventories for a long period of time, particularly the more premium ends of their product range.”

He added: “It is more flexible and gives them the opportunity to be more agile in both managing their capital but also taking advantage of opportunities quickly as they arise. Overall, because it is purpose-built for inventories, we can cover a larger part of the supply chain – all the way from cask in stock right down to export finance, and covering receivables as well.”

He emphasised that there was not a “speculative element” to the service Ferovinum offers. Noting that the company was not an exchange, broker or trader, he said users of the service have full control of the process, and can release their spirit for sale when they chose.

“It is about providing an innovative, purpose-built and very flexible supply-chain solution,” Mr Fowler said.

He added that the company was also developing inventory and supply-chain management tools on the platform, stating: “It is a more purpose-built and fulsome solution than a traditional debt facility.”

Mr Fowler said the company is currently funded by an unnamed bank and credit fund, and revealed that a large number of banks are interested in providing capital to the platform.

Mr Mathieson said Ferovinum offers a more “flexible” alternative to traditional lending models in the whisky industry is long overdue. He said: “Ferovinum is already bringing some real financial muscle to the burgeoning UK wine industry with a model that is now absolutely right for Scotch whisky businesses, many of which are facing the same challenges and opportunities.

“This is about democratising access to finance with levels of growth funding that have traditionally been out of reach for most companies, whether they’re heritage brands or one of the exciting new entrants to Scotland’s whisky market.”

Mr Mathieson added: “Having founded and managed whisky businesses over the past few decades myself, I immediately understood the benefits that the Ferovinum platform brings. Companies typically have a lot of stock, but for most, it sits in warehouses as a completely dormant and untapped asset.”

“Releasing its value using bank facilities is often a prohibitively lengthy and cumbersome process, which is problematic at a time when the need for agility and acting quickly to seize opportunities has never been greater.”