Beechbrook closes UK SME fund on £150m

Greg Gille
02 February 2017

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Beechbrook Capital has reached a final close on ТЃ150m for its maiden SME-focused credit fund.

Fundraising for the UK SME Credit Fund started in July 2015, with the aim to raise between £100-200m. At the time, managing partner Paul Shea told unquote" the vehicle was created to meet increased demand for dedicated senior financing among non-private-equity-backed UK SMEs. According to Shea, the fund aims to fill the gap left behind by both traditional lenders and fellow credit funds, which have typically focused on larger businesses.

The vehicle held a first close on £100m in January last year, with Arbour Partners working with the firm as placement agent at the time of launch. UK SME Credit Fund is headed by managing director Jon Herbert.

The fund succeeds Beechbrook's three private-debt-focused vehicles, which have raised in excess of £275m since launch and target private-equity-backed assets in the UK and northern European lower-mid-market. The firm is still raising Private Debt Fund III, which held a first close at around €100m in August 2016.

In addition, Beechbrook has announced it will open a new office in Manchester in the first half of 2017, from which the SME fund will also be deployed.

Investors
The final close was backed by a mix of new and existing investors, hailing from the UK, continental Europe and North America.

British Business Bank Investments, which had already come in at first close, increased its commitment. Its CEO, Catherine Lewis La Torre, said in a statement that the fund's focus would help address the funding gap for loans between £3-15m in the UK.

Other institutional investors that backed the fund in its early stages included the European Investment Fund.

Investments
UK SME Credit Fund supplies £3-15m senior secured loans to UK non-private-equity-backed SMEs. It targets businesses with turnover of between £10-100m and EBITDA of more than £1m.

The fund has already made six investments and is deployed at 30%. Recent transactions included unitranche packages provided to aviation business 2Excel Aviation, and Cloud Direct, a cloud migration and management company.

People
Beechbrook Capital – Jon Herbert (managing director).