Specialist fund manager Beechbrook Capital has announced the first close of its inaugural UK SME Credit Fund, with commitments of more than £100m. The aim of the fund is to support UK SMEs with a turnover of between £10m and £100m and EBITDA of more than £1m – a target group that Beechbrook estimates will encompass around 40,000 businesses.
Investors that have made commitments to the new fund include British Business Bank Investments Limited, the commercial arm of the British Business Bank, and the European Investment Fund. Beechbrook expects to hold a second close in Q2 2016 with a target fund of up to £200m.
The UK SME Credit Fund will provide mainly senior secured loans of between £3m and £15m to non private equity-backed businesses to support acquisitions, buy-outs, shareholder re-alignments and general expansion plans, and builds on Beechbrook’s three existing tprivate debt funds, which invest in lower mid-market private equity-backed businesses in the UK and northern Europe.
The fund’s highly experienced management team is led by managing director Jon Herbert, formerly a director of LDC and head of Lloyds Acquisition Finance. Other team members include Tim Johnston, who has been with Beechbrook since 2009; Peter Kirtley, formerly investment director at Lloyds Banking Group; and Jon Penfold, who has 32 years’ relevant experience, 16 of them at Royal Bank of Scotland where he managed SME loans and equity investments.
Beechbrook managing partner, Paul Shea, said: “The UK SME Credit Fund is a natural evolution for Beechbrook. We are pioneering this type of funding to UK SMEs. We have received numerous requests for it from family and manager-owned businesses around the country, which are acutely aware of the shortage of long-term development and expansion finance currently available. Other credit funds in the market generally target larger companies or focus specifically on private equity-backed buy-outs.
“Beechbrook and our recent hires bring unrivalled experience of the UK SME market and a wealth of relationships. We look forward to playing a constructive role in helping fund the growth of UK small and medium-sized businesses.”
Addressing the Funding Gap
Peter Wilson, CEO of British Business Bank Investments, spoke of the company’s relationship with Beechbrook and their hope that the fund will fulfil a need not currently addressed.
“We have supported Beechbrook and its experienced management team for a number of years through our investment programme and we are particularly pleased to have invested in its latest UK SME Credit Fund. The Fund’s focus on non private equity-backed SMEs will help address the well-publicised funding gap for loans between £3m and £15m and is in line with our aim to support diverse debt finance markets.”