Regional debt fund launched to support SME lending

Toscafund has launched a new regional debt fund, focused on offering flexible debt capital to SMEs.

The Tosca Debt Capital Fund (TDCF) aims to initially raise £110m by January 2016 and establish itself as the lender of choice for UK regional SMEs seeking flexible debt capital.

Tailored debt structures with cash preservation features will facilitate corporate activities such as buy-outs and acquisitions, growth/development capital raising and refinancing/enhancement of existing facilities.

From its head office in Manchester, the TDCF will proactively approach ambitious regional SMEs with investments of between £5-£15m to support their strategic growth plans.

Unlike similar lending vehicles, the TDCF team will be locally based and committed to building relationships and supporting the regional SME market with capital that is tailored specifically to their needs both in terms of amount and structure.

The fund is founded and led by newly appointed Toscafund Partners Gary Davison, former Capital & Debt Advisory Partner at EY, and Richard Williams, former Principal of the ‘Big Four’ accounting firm’s Capital & Debt Advisory team.

There are approximately 507,000 SMEs in the North West*, with the region enjoying impressive growth in recent years and the Government’s ‘Northern Powerhouse’ plans set to accelerate development.

Gary Davison commented: “The role of non-bank finance has never been more important than in the current economic climate. European and UK economies are over-reliant on bank lending, which with legislative changes such as Basel III, is beginning to cause significant challenges for smaller businesses.

“We recognised that there is a significant opportunity for a private debt provider to fill this void, especially in the regional SME market where ambitious businesses are stunted due to a lack of access to alternative debt capital. For SMEs embarking on a transaction of any sort, relationships and geographical proximity are crucial as a typical deal will take numerous meetings to close.”

Martin Hughes, founder of Toscafund, added: “I worked closely with Gary and was very impressed with his advice and support on debt structures during the successful £670m MBO of Daisy Group. We see this as an excellent opportunity to work with seasoned, experienced investment partners to deploy assets into the regional SME market, which has significant growth potential and is seriously under-serviced at present. In Gary and Richard we have found the perfect partners to utilise their skills and relationships to build a successful business out of Manchester”.