Infinity targets £50m for SME debt fund

The new vehicle will be led by Dave Furlong, a former HSBC and Lloyds leveraged financing veteran.

UK investment manager Infinity has hired domestic banking veteran Dave Furlong to lead its £50 million ($77 million; €69 million) debt fund. The fund has collected most of its target from a range of investors including family offices, and has commitments for the full total by the end of the year.

Furlong joined last month after completing his MBA, which he left Lloyds Bank in 2014 to do. Furlong had been at Lloyds for a year after 13 years with HSBC, he told PDI. His last role at HSBC was head of leveraged finance for the North West. 

Infinity’s debt strategy is focused on higher yielding subordinated debt with tenors of around three-five years though it will be able to make loans of up to seven years. The fund is targeting returns of around 12-14 percent. It will make loans of between £2 million and £10 million. 

As long as the economics are right, Infinity can be flexible on structure, considering a range of instruments including mezzanine, payment-in-kind and unitranche facilities alone or in tandem with other lenders, explained Furlong. 

The focus is sector agnostic with the only borrower requirement being that they are regionally-based growth-orientated firms.

“There is a significant appetite for this type of debt funding among ambitious companies, and particularly so within the regional market. However, to date there has been either insufficient or inconsistent supply in order to meet this need. Infinity has a strong track record in relationship based deal origination and execution, and has identified a clear niche for a regionally focused and flexible debt financing solution,” said Furlong. 

Furlong expects to close two deals before the end of the year, one for a private-equity-backed company, as well as an unsponsored deal. Of the opportunities he has been seeing, they are split 50/50 between sponsored and unsponsored deals, he added. 

The new debt fund is Infinity’s tenth standalone fund and brings the firm’s funds under management or advice to almost £600 million.