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Beechbrook Capital to launch a new credit fund to finance UK SMEs 

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Beechbrook Capital, the specialist direct lender, is launching a new fund to support UK small and medium-sized businesses turning over between GBP5 million and GBP50 million. 

The Beechbrook UK SME programme represents a significant addition to the private credit sector which has hitherto been dominated by debt funds competing to finance larger buyouts. Beechbrook is looking to raise between GBP100 million and GBP200 million with a first close planned for October 2015. The fund will target mainly senior secured loans in non-private equity backed UK companies.
The fund builds on the existing funds of Beechbrook, which invest in private equity backed companies – not only in the UK but also in Germany, Scandinavia and the Benelux countries. It is estimated there are around 40,000 UK businesses in Beechbrook's chosen target range. In preparation for the first close, Beechbrook has also made two senior appointments that materially broaden its UK origination, execution and portfolio management expertise.

Jon Herbert will become managing director of the new fund and will also join the investment committee. He brings 28 years of relevant experience, most recently as a director of LDC, where he set up a new in-house debt advisory function, and previously, as head of Lloyds Acquisition Finance with responsibility for sourcing, executing and managing leveraged loans in the SME market.
Jon Penfold will become a member of the Beechbrook Advisory Board and the investment committee.  He brings 32 years' relevant experience, 16 of them at Royal Bank of Scotland engaged in managing loans to and equity investments in SMEs. Prior to that, he spent four years at the private equity firm, 3i.
Beechbrook partner, Paul Shea, says: 'The UK SME Credit Fund is a natural evolution for Beechbrook. We have received numerous requests for funding of this type from accountants, solicitors and corporate finance advisers around the country, who are acutely aware of the shortage of long-term development and expansion finance currently available to UK SMEs. While there are numerous other credit funds in the market, these generally target larger companies.
'Our two new hires bring unrivalled experience of this market and a wealth of contacts. With them on board, we look forward to playing a constructive role in helping fund the growth of UK mid-market companies.'
Beechbrook manages two debt funds with combined assets under management of around EUR250 million. Its latest fund, Beechbrook Mezzanine II fund, closed in July last year at EUR151 million with commitments from the European Investment Fund and the British Business Bank, alongside several leading private sector investors.

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