Background

SepSci Lab Rentals is a partnership between Westbrooke Aria, Separation Scientific South Africa, an importer and distributor of analytical and testing laboratory equipment and
consumables, and Investrent, a specialist, independent solutions company that focuses solely on laboratory equipment.

The company’s client base is essentially anyone who “wears a white coat” – scientists working in the fields of medical pathology; life sciences (such as research institutes) and industrial sciences (such as the food, petrochemical sectors).

The equipment provided is exceptionally specialised and high-tech – chemistry analysers, haematology analysers, blood centrifuges, blood gas analysers, and gas chromatographs, which often causes sales cycles to be detailed and lengthy.

Of the 38 companies that supply this type of equipment in South Africa, Separation Scientific is the fifth largest after four international giants whose names are synonymous with medical and scientific technology and equipment.

SepSci Lab Rentals was established to provide a hassle-free, one-stop equipment supplier solution for local laboratories – one that would include the rental and maintenance of the equipment as well as the ongoing supply of proprietary consumables.

This was a major departure from the industry’s conventional ‘cash only’ supply model. This required laboratories to either finance their acquisition of the equipment from their own resources or enter into a funding arrangement with a financial institution. Contracts for maintenance as well as the supply of essential consumables, required a separate arrangement.

The Challenge

Buying cycles for laboratories are notoriously long – so once they have made the decision to purchase equipment from a specific supplier, the last thing they want to hear is that there is a problem with obtaining financing for the deal.

However, SepSci Lab Rentals was having limited success with the traditional funding channels in obtaining funding for deals, let alone access to sufficient capital to build up the business and to back what could turn into a significant solution for the entire industry.

There were two main issues: a lack of understanding on the part of the commercial banks and funders about the highly specialised and expensive equipment they were being asked to finance, and their reluctance to fund an arrangement that includes maintenance and consumables that are to be provided by a third party with which they do not have a formal agreement.

Within months of the establishment of SepSci Lab Rentals, the partners recognised that a different approach to the funding of deals it was trying to conclude with various laboratories, was required.

The Solution

The solution was having Westbrooke Aria become a third partner in SepSci Lab Rentals. Westbrooke was to provide the bulk of the funding that would enable more deals to be concluded and the business to be built up; Separation Scientific was to continue providing the equipment, maintenance and consumables; and Investrent was to provide the solution and administration.

The Result

Steve McTaggart, (CEO) at Investrent, describes Westbrooke’s decision to invest in SepSci Lab Rentals as “manna from heaven”.

“Although the arrangement with Westbrooke is just over a year old, it has made a massive difference. Sales have increased by around 5% and, with the inroads we have made with several of the major laboratories thanks to our ability to structure deals for them and obtain approval in a fraction of the time it would have taken in the past, we anticipate that this will
grow further” he said.

As a direct result of an important deal struck with one of South Africa’s largest pharmaceutical companies, SepSci Lab Rentals was able to offer a permanent position to a promising young intern. In addition, two new technical posts have been created.

“From a profitability perspective, we anticipate significant growth in years three, four and five when we get into the replacement phase of our agreements with clients and start churning our capital,” McTaggart added.

According to McTaggart, the relationship between the three SepSci Lab Rentals shareholders “runs like clockwork”. With each partner’s role clearly defined, there is no unnecessary conflict or operational interference.

Ryan Rittoff, (Head of Origination) at Westbrooke Aria, said that based on the bio-technology market in Africa’s growth potential, the prospects for SepSci Lab Rentals was huge. “We believe that SepSci Lab Rentals, although already a success will grow into one of our more significant rental businesses over the next 18 months,” he concluded.