UK-based direct lender Beechbrook Capital has supported the growth of the Chinese food takeaway business Hotcha with a £7.5 million ($9.7 million; €8.6 million) loan.
The transaction is backed by Beechbrook’s credit fund which targets investments in UK small and medium-sized enterprises. The fund is eyeing a final close of £200 million by December and has so far raised £110 million, £30 million of which has been invested across four investments, including Hotcha.
The fund has attracted capital from the British Business Bank and the European Investment Fund, according to PDI.
Hotcha was established in 2011 by James Liang and has 10 locations in England. The loan, a unitranche facility, will reach maturity in five years and will be used to fund the opening of 10 additional locations over the next five months. Other investments underwritten by the fund include commitments to Oxyen Freejumping, a trampoline parks operator, and MCM Expo Group, a comic convention business.
Jon Herbert, managing director of Beechbrook’s SME fund, said that the business is the largest and fastest-growing branded Chinese takeaway business in the UK and that the fact it is a “high growth business with distinct offerings and is well managed” made it an attractive investment.
“The opportunity to invest in Hotcha is a great example of the demand for flexible growth capital such as ours from UK SMEs,” Herbert added.
Liang said: “Beechbrook’s unitranche proposal was the perfect fit given our current stage of growth. We have a proven business model and scalable platform within a fragmented market.”
Attract Capital and law firm TLT advised Hotcha and Gateley advised Beechbrook on the transaction.
Last month, Beechbrook hit a first close on its third private debt fund after it raised more than €100 million. The fund has a broader geographical mandate than the UK SME fund, targeting investments across Europe. Paul Shea, managing director at Beechbrook, told PDI last month it was “cautiously optimistic” about opportunities for the fund arising following the vote for Brexit. A final close target of between €200 million and €250 million is expected to be reached next year