04 April 2019

Sustainable innovation drives growth

In 1989, Tom Richardson started a company out of his home in Montreal to supply CD mastering services to a local manufacturer. Fast forward 30 years and Targray is now a diversified multinational specialty materials company with offices in eight countries and annual sales of US$400 million in clean-energy solutions and products.

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The company’s initial growth paralleled that of the CD industry, with Targray quickly establishing itself as a leading supplier of manufacturing materials. By the late 1990s, Targray’s materials could be found in 50 percent of all CDs.

“We had customers all over the world, and we needed an international banking partner to help our business run more efficiently,” says Andrew Richardson, son of the founder and Targray’s president and CEO. “That’s when we found HSBC. We had inventory in the Netherlands, Hong Kong and California that had to be financed – which was a challenge for other banks. HSBC was able to work with us in all of these countries.”

Although the company had phenomenal success in this market, management realized in the early 2000s that the industry didn’t offer growth long-term potential. “With the advent of digital downloading, we knew this wasn’t an industry that would be around forever,” says Richardson.

The company pivoted, taking advantage of the fact that a product it supplied to CD makers was also used in manufacturing solar panels. Growth in this new industry also came quickly. In the first year of operating its Solar Division, Targray had annual sales of US$55 million in sales. Two years later, this figure had nearly quadrupled to US$224 million.

Today, Targray is a major international provider of innovative materials and cost-effective supply chain management solutions for photovoltaic manufacturers. That’s good for the planet: the more cost-competitive renewable energy becomes, the more likely it is that individuals and organizations will shift away from carbon-based energy sources.

Targray’s rise to leadership in a new industry was facilitated by its partnership with HSBC. “During that transition period, we were very demanding of HSBC, because, like us, they had to learn all kinds of new things on the fly,” says Richardson.

“HSBC’s receivable finance solution is one of the most important financial tools currently at our disposition,” says CFO Michel Tardif. “This facility, in conjunction with our credit insurance programs, has allowed Targray’s solar business to meet and exceed its growth objectives.”

Some of those growth objectives included moving into new sectors. A few years after entering the solar industry, Targray recognized that the challenges faced by its solar customers were shared by manufacturers, distributors and project managers in other clean-tech energy markets. This prompted the formation of a Battery Division in 2010 and a Biofuels Division two years later.

In the Battery Division, the company works with battery manufacturers and energy storage technology companies to develop the next generation of innovative materials. It also collaborates with the Solar Division to offer supply-chain solutions, including inventory management, battery material sourcing and integrated logistics through its warehouses in seven countries and partner warehouses in 20 more.

Similarly, in biofuels, Targray works with retailers to source and supply bio-based fuels as part of its turnkey solutions that include storage options and transportation logistics through its company-operated rail fleet and its network of trucking and shipping partners. It is one of the largest and fastest-growing global distributors of biodiesel fuel, primarily serving markets in the US and Europe.

Targray is now a leader in four major markets and across multiple industries. One of the world’s largest material suppliers focused on the clean tech industry, its products and solutions are reducing environmental impacts and improving energy efficiency in the agricultural, automotive, chemical, energy storage, fuel retailing, photovoltaic and transportation sectors.

In addition to providing solutions that encompass everything from receivable finance and credit facilities to foreign exchange lines and commercial banking, HSBC recently took the lead on a structured commodity syndicated finance solution that will help fuel Targray’s ongoing growth.

“HSBC’s Montreal team helped guide us through this process with their knowledge of our business and experience with the syndication market,” says Tardif. “Our new banking syndicate has allowed us to secure the financing we need to expand our existing business divisions and to pursue opportunities in new markets.”

Disclaimers

The information presented is not meant to be comprehensive and does not constitute financial, legal, tax or other professional advice. You should not act upon the information contained in this document without first obtaining specific professional advice. While reasonable care has been taken in preparing this document, HSBC does not make any guarantee, representation or warranty (express or implied) as to its accuracy or completeness. The information presented in this document is subject to change without notice.

Certain of the products and services offered by HSBC and its subsidiaries and affiliates are subject to credit adjudication and approval. This document does not constitute an offer to provide the services and products described and the provision of such services and products remains subject to contract.

Issued by HSBC Bank Canada ("HSBC")

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