Beechbrook holds first close on £128m

Michelle D'Souza, Creditflux
06 March 2019

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Beechbrook Capital has held a ТЃ128m first close for its second lower-mid-market direct lending fund, Beechbrook UK SME Credit II.

The fund, which launched in August 2018, has a £250m target size and £300m hard-cap. It is anticipated that it will follow the strategy of its predecessor fund, investing in sponsorless UK-based small and medium-sized businesses with a turnover of between £10-100m.

Beechbrook UK SME Credit II will primarily invest in senior secured loans to support acquisitions, buyouts and shareholder realignments for expansion options. It will invest between £5-15m, with a diversified portfolio of around 22-24 investments across its three-year investment period. At least 85% of the fund will be invested in first lien loans.

The vehicle, which has an eight-year length, will target 8-9% net IRR, Unquote understands. Beechbrook has already begun investing from the fund, according to the announcement, with the London-based manager providing financing to Exeter-based Hosted Desktop UK, a provider of cloud services to UK SMEs.

The firm's inaugural UK-focused private debt fund, Beechbrook Capital UK SME Credit I, held a £150m final close in January 2017. The fund, managed by Jon Herbert, is now fully invested.

Founded in 2008, Beechbrook has about €750m in assets under management across five direct lending funds. Its three other private debt funds support northern European private-equity-backed companies with a typical enterprise value of €10-100m, investing between €5-25m per transaction. Beechbrook has additional offices in Cork, Manchester and Dublin.