Greater Manchester, Santander back UK SME fund

The UK pension fund and bank have made commitments to Enterprise Value’s new £40 million private debt fund.

Greater Manchester Pension Fund has committed £10 million to Enterprise Ventures’ new small business debt fund, Paul Taberner, investment director at Enterprise Ventures, told PDI.

The Manchester-headquartered firm has launched the £40 million ($62.6 million; €56.3 million) Enterprise Ventures SME Loans and includes a £30 million commitment from UK high street bank Santander UK. The firm is in talks with other investors about a potential expansion or a second closing, Taberner added.

The fund has no specific target at present but has the flexibility to increase in size and has a 10 year life.

GMPF has committed capital to Enterprise Venture funds in the past and was keen to participate in the local small to medium-sized enterprise debt market, Taberner told PDI. After an initial discussion in July last year, Enterprise Ventures has been working with Santander to develop the fund structure and bring the parties together.

The new fund will extend loans of up to £1 million to businesses which have been established typically for two to three years or more and making EBITDA of around £100,000 or more, Taberner said.

Loans will be available for all purposes including acquisitions, asset purchases, operational improvement and business development.

Total funds under management at Enterprise Ventures amount to £200 million with the launch of the new fund, chief executive Jonathan Diggines said in a statement: “Enterprise Ventures SME Loans represents a significant new institutional source of investment into the SME market, one which is not subject to the constraints of other government and European funds.”

“The backing by Santander UK plc and Greater Manchester Pension Fund supports our aim of providing better access to finance for small businesses and their commitment is highly innovative,” he added.
Santander has made the investment as part of its Breakthrough initiative, a suite of financial and non-financial services and products for UK businesses.

Damian McGann, divisional managing director – North of England, at Santander UK Corporate & Commercial, commented in the statement: “SMEs need access to multiple sources of finance, our support of Enterprise Ventures allows us to fill a gap in the market and provide a breadth of innovative solutions for all ambitious SMEs.”

Lending at Santander UK has increased over the last four years by an average of 20 percent per annum, McGann added.

Enterprise Ventures has offices in Manchester, Liverpool, Preston and Dodworth near Barnesley, and provides venture capital, growth capital and loans to small businesses in the UK, extending sums from £25,000 to £2 million. The firm completed 218 deals with a total value of £30 million in 2014, according to its website.