New UK hire and planned fund for Beechbrook

The UK-based lower mid-market lender has brought in Richard Smart from NatWest as it prepares to raise its largest domestic fund to date.

Richard Smart

Beechbrook Capital, the lower-mid-market debt manager in the UK and mainland Europe, has appointed Richard Smart as a managing director.

Smart will help drive the firm’s UK direct lending strategy and originate new SME investment opportunities alongside the Beechbrook UK investment team. The appointment also expands Beechbrook’s regional footprint into Leeds, from where Smart will operate.

He joins from NatWest, where he spent 22 years, most recently as head of UK Financing Solutions responsible for the UK regions and London. He led the origination, structuring and execution of event-driven transactions for growth SMEs, FTSE 100 customers and leveraged finance. He oversaw more than £4 billion of debt deployment across around 115 transactions per annum.

Beechbrook managing partner Paul Shea confirmed to Private Debt Investor that the firm will this year launch its fourth UK SME fund, targeting sponsorless lending to SMEs with EBITDA of up to £15 million ($19 million; €17 million), with a likely target of between £250 million and £300 million. This would be a step up compared with the £185 million (including co-investments) raised for the firm’s third such fund, which closed in June 2023.

He added that the firm has two exits in the pipeline and is likely to complete three to four new deals by the end of the first quarter. The completion of these deals would preface the launch of the new fund.

Drawing on his experience at NatWest, Smart told PDI: “The high street lenders can’t and don’t want to be all things to all people so there’s space for different offerings and the Beechbrook offering is differentiated. Being able to provide flexible solutions that don’t fit the mould of the banks is really crucial to help drive growth in the UK.”

Asked whether there is much competition in the UK sponsorless market, Shea believes there’s not as much as some might think. “It’s a different skill set. It’s still fundamental credit analysis but you need a sponsor mindset and the ability to empathise with management, do management due diligence, structure incentives, put in place corporate governance, etc. You have to be well resourced with seasoned investment professionals when there’s no private equity sponsor running the process. ”

Beechbrook also has a Europe-focused sponsored lending strategy, for which the fourth fund is currently being raised. In all, the firm has around €1 billion in assets under management and – in addition to Leeds – offices in London, Birmingham, Manchester, Cork and Frankfurt.