Beechbrook holds second close of UK SME fund at £170m

The firm’s third fund focused on UK SMEs has already made seven investments and aims to hold a final close in the first half of 2023.

London-headquartered credit specialist Beechbrook Capital has held a second close of its third UK SME Credit fund with £170 million ($199 million; €192.9 million).

Institutional investors in the fund include British Business Bank Investments, the Greater London Authority Strategic Reserve, Greater Manchester Pension Fund and Strathclyde Pension Fund. The fund expects to hold a final close in the second quarter of 2023 and it is seeking up to £300 million.

The fund will lend to SMEs across the UK regions with turnovers of between £10 million and £100 million and EBITDA of more than £1 million. It has already made seven investments worth around 50 percent of capital committed so far. Investments are spread across sectors and geographical locations in the UK.

It will provide senior secured loans to predominantly non-private equity-backed businesses for acquisitions, buyouts, shareholder realignment and general expansion purposes. Beechbrook said there are approximately 30,000 UK businesses in its target range. Ticket sizes will vary between £5 million and £25 million.

The fund will be managed by Jon Herbert who joined Beechbook seven years ago to launch its UK-focused strategy and has 35 years of experience. He will be supported by a team based across London, Manchester and Birmingham through Beechbrook’s local office network.

The fund will receive additional support from a fund performance team, led by Steve Morris, which is focused on portfolio management and value creation through working closely with investee companies and their stakeholders.

Paul Shea, managing partner of Beechbrook, said: We’re delighted with the progress the strategy has made over the last seven years and the financial support we are providing to regional UK SMEs. Given the expected economic headwinds we will remain cautious but active throughout the cycle. We will continue to be selective from our wide origination network and aim to deliver attractive risk-adjusted returns and yield for our investors.”