Finance in Cornwall 2015 Segment 2B
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F Finance in Cornwall 2015 “71% of SMEs approach only one provider of finance” Richard Wadman – Corporate Finance Director Business trading for > 2 years
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Transcript of Finance in Cornwall 2015 Segment 2B
FFinance in Cornwall 2015
“71% of SMEs approach only one provider of finance”
Richard Wadman – Corporate Finance Director
Business trading for > 2 years
www.francisclark.co.uk
Structure of morning
• Background, EU “calls” and the Banks (8:30am to 9:42am)
• LEP, Cornwall EU millions and “calls”• Banks and SMEs• Company presentation
• Grants, debt, equity and business support – stratified by age of business (10:02 am to 11:22 am)
• Secured finance, alternative sources of finance, business support (11.42 am to 1.00pm)
• State Aid• Company presentation
• Q&A one to one / Networking (1pm to 2pm)
www.francisclark.co.uk
Funding and support – for business > 2 years old
• 6 to 8 minute presentations on:
• “Investment ready” • Grants• Peer to Peer (loan) x 2• SW Loan Fund (loan)• Growth Funds - mezzanine• Growth Funds - equity• Venture Capital/ Private Equity
Getting investment ready
David ArmstrongCorporate Finance Director
www.francisclark.co.uk
What we will cover
• What funding is right for you?
• Are you ready?
• How do you secure it?
www.francisclark.co.uk
Matching requirements
Understand your
business and its
requirements
Understand funding
options and funders’
requirements
General: Debt or Equity Risk? (and/ or potential for grant
funding?)
www.francisclark.co.uk
Requirements: Grants
• “Project” eligibility – sector, size, location…
• Job creation
• Timescale – prescriptive, process and panels, not retrospective
• Match funding
• ‘Need for grant’ versus viable proposition
• State Aid
www.francisclark.co.uk
Requirements: Debt
• Serviceability & Headroom
• Security / Personal Guarantees
• Conduits for government initiatives
• Covenants – achievable / appropriate?
www.francisclark.co.uk
Requirements: Equity
• Exit route and returns to the investor
• Investors’ expertise vs. loss of independence?
• Be prepared to discuss valuation
www.francisclark.co.uk
Investment ready?
• The story – past, present and future
• Due diligence:
Compliance and legal
Financial performance
• Credible management
www.francisclark.co.uk
Applying for the funding
• When, why and what funding is needed (Business plan and projections)
• Communicating your requirement (Business case / application form and projections)
• Building the relationship – on going dialogue
www.francisclark.co.uk
Structure of a business plan
• Contents
• Executive summary
• Background to the business
• Products and services
• Customers and markets
• Business operation
• Management
• Financial history
• Financial Projections
• Appendices
www.francisclark.co.uk
Investor Ready - Conclusions
• Appropriate funding / understand the funder
• Documentation
• Sufficient information for a risk assessment
• Be prepared for “due diligence”
• Build in sufficient time
• There is assistance out there…
www.francisclark.co.uk
“You are often trying to persuade a stranger to give you somebody else’s savings…”
R G FGrant Funds
John HutchingsProgramme Manager, RGF Grant Funds
Plymouth University
R G FGrant Funds
Plymouth UniversityHas led or partnered in
5 of the 6 RGF “Rounds”
R G F
Cornwall & Isles of Scilly LEPHeart of the South West LEP
1000+ new jobs£15M+ of private sector co-investment
Helped over 90 businesses
R G F 5U B I through North Devon+
Target 373 new jobs£15M of co-investment
HotSW LEP ONLY
R G F 6South West Growth Fund
£10M Fund, grants from £15k to £1MTarget – 634 new jobs
£22.3M of private sector co-investmentMainly supporting capital expenditure
projectsCARE : some restrictions
R G F 6South West Growth Fund
State Aid restrictions will applyIntervention Rates most favourable in Cornwall
New job creation and private sector co-investment key to success
Competitive process giving maximum value for money for the public purse
R G F 6South West Growth Fund
ContactJohn Hutchings/John Lewis (Grants Team)
[email protected]@plymouth.ac.uk
www.gaininbusiness.com
Funding Circle
Jeremy CrinallBusiness Development Manager South West
Simple, affordable business loans
“At present the largest four banks account for over 80% of UK SMEs’ main banking relationships.
Many SMEs only approach the largest banks when seeking finance…in the case of the first time SME
borrowers the rejection rate is 50%.”
Gov.uk, 2014
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What is the alternative?
Traditional lending
Peer-to-peer lending
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A simple model: Lenders can spread risk by lending small amounts to hundreds of businesses
Business loan
Loan parts
Loan parts
Loan parts
Loan parts
Loan parts
Loan parts
Loan parts
Loan parts
Loan parts
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3 Founding Members – set up in 2009
Over £600m lent
Over 10,000 loans completed
175+ Staff in the UK
60+ Staff in the USA
Aim is to become the global market-place for investing in and borrowing for SMEs
(as of April 2015)
Funding Circle – Who are we?
Index Ventures
Union Square
Ventures
AccelPartners
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• We are not a Bank - Funding Circle do not lend our own money
• Funding Circle are an online market-place – where investors lend directly to SME businesses
• £5.2m lent to SME in Cornwall (march 2015)
• Liquidity depends on both the ‘Fractional Retail’ and ‘Institutional Whole Loan’ market-place
• Institutional investors agreed to invest £127m & $420m in our ‘Whole Loan’ market-place – UK & US
Market-place lending
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• The Government lent an initial tranche of £20m through Funding Circle in 2013
• A further £40m has been committed in late 2014
• Forms part of the Business Finance Partnership scheme (British Business Bank)
• 10% of every loan on the platform is financed by Government
The Government’s commitment to Funding Circle
Unsecured Loan
£5k - £250kSuitable for a wide range
of purposes
6 months to 5 year term
Rates from 6% (8.3% avg A+ over 36 months)
Fees between 3-4% of loan amount
No ERP’s
Secured Loan
£150k - £1m All asset security
agreement
Charge on specific properties or assets
Types of borrowing
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Asset finance
£20k - £1m Suitable for a wide
range of hard assets
Hire purchase
Flexible on LTV–100% considered
Individual deals up to £250k, credit lines of up to £1m
Any business, any purpose……
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Loan Purpose
Working capital
Expansion/growth Capital
Asset purchase
Other
Residential property devel-opment
Asset finance
Refinancing a loan
Tax payment
Tax liability
Annual purchase
Commercial mortgage
Sector
Automotive
Finance
Leisure & Hospitality
Education & Training
I.T and Telecommunications
Agriculture
Consumer Services
Healthcare
Manufacturing and Engineering
Other
Professional and Business Support
Property and Construction
Retail
Transport and Logistics
Wholesale
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Minimum criteria includes
• Limited companies, LLP’s & non limited
• 2 years of filed/formal accounts + latest 3 month bank
statements
• Directors – no CCJs, CVA & CVL (last 6 years)
• Min turnover £50,000
• Beneficial ownership in UK
• Loan supported by PG – Main shareholders
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B Y D A V I D B R O W N
UK P2P business lending is a billion pound industry
Regulated by FCA
UK has most advanced website platforms
16 business lenders in the UK
Folk2Folk 6th largest in UK
PEER-TO-PEER BUSINESS LENDING
Varied concepts across increasing number of Companies and Platforms
Some online P2P platforms offer unsecured lending, some offer a mix
Types of security include: property, any tangible asset, director’s guarantee
Folk2Folk only offer secured lending against property
WHAT IS SECURED LENDING?
First charge mortgage
Benefits of secured lending
The loan is more attractive to a lender
Minimises risk for the lender
If the borrower does not have property to secure against their loan we will not lend
HOW IT WORKS
This type of lending isn’t newPreviously known as a private mortgage: people with money lent to people in the community who needed it and the local
solicitor would referee the arrangement.Business are finding it harder to get credit and people are not
seeing the levels of return on their savings as they had previously
There’s been a re-emergence of the old fashioned way of borrowing and lending but now under the banner of a modern
FCA regulated industryAnd with Folk2Folk, who are born out of a Cornish firm of
solicitors with 300 years experience of private mortgages, we see it coming full circle.
HISTORY OF SECURED LENDING
• We’ve introducing finance for business initiatives ranging from the purchase of Golf Clubs, kick-starting multi-million pound property developments, and renovating leisure complexes and barn conversions.
• Utilise your property assets if you are looking to grow your business or require a cash injection.
• We offer face2Face in addition to online proposition.
• Speed of decision making
• Local knowledge
FOLK2FOLK SECURED LENDING
TYPES OF BUSINESS ACTIVIT IES WE FUND
property build/purchase55%
renewables10%
commercial12%
agriculture7%
leisure9%
other7%
property build/purchase
renewables
commercial
agriculture
leisure
other
www.folk2folk.comTwitter.com/Folk2FolkUKFacebook.com/folk2folk
Linkedin.com/company/folk2folk
Who areSWIG Finance?
We fund businesses looking
to
Start Up or Grow.
+ =
Business Support Growth
Get in touch
www.swigfinance.co.uk
01872 223883
SWIG Services LtdLowena House, Glenthorne Court, Truro Business ParkThreemilestone, Truro, Cornwall, TR4 9NY
SANTANDER GROWTH CAPITAL
PETER ABEL, DIRECTOR
SANTANDER GROWTH CAPITAL,
Tel: 07809 493791
Email: [email protected]
Website: www.santanderbreakthrough.co.uk
SANTANDER BREAKTHROUGH PROGRAMME
The Breakthrough programme will invest £200 million in fast-growth SMEs, supporting local enterprise and community initiatives, creating jobs, inspiring entrepreneurs of the future and turbo-boosting a private sector led economy
This initiative will help SMEs participating in the Breakthrough programme to reach new overseas markets if their growth plans and ambitions are beyond the UK. It includes subsidised trade missions, educational roadshows and support accessing information on exporting.
Santander is running a unique experience programme for fast-growth SMEs that takes them behind the doors of the world’s most iconic and best fast-growth businesses, to learn first hand how they did it – real experience to help their own growth journey.
In keeping with our focus on responsible business, Santander has launched a number of initiatives to encourage more responsible and inclusive business practice and to invest in Social Enterprise development.
Santander is running regional Breakthrough Live conferences for fast-growth SMEs. Working with Santander Universities the Breakthrough Live conferences bring together leading entrepreneurs to share experiences.
Santander has launched an online portal for SMEs participating in the Breakthrough investment programme to access the best student and graduate talent across our partner University network – including Universities in Scotland.
Santander has up to £200 million to invest in fast-growth SMEs turning over between £500k – £50m across the UK. The investment programme will run over the next 3 – 5 years and invest in up to 200 SMEs.
1. Breakthrough Growth Capital
4. Breakthrough Talent
2. Breakthrough Live
5. Breakthrough Responsibly
3. Breakthrough Masterclasses
6. Breakthrough International
INTRODUCTION - GROWTH CAPITAL FILLS THE FUNDING GAPas identified in the Rowland Report
OUR BROAD CRITERIA
Annual turnover £0.5m – £50m
Growth in a combination of sales and/or profits
Track record of sustainable operating profitability and cash generation
Proven management team
Privately owned businesses rather than Private Equity backed
Not start-ups.At least 3 years of financial history
AREAS WHERE GROWTH CAPITAL SUITABLE
Capex investment to support growth plans
Investment in New Product Development
Investment in sales & marketing overhead for new products / areas
Acquisition funding support
Funding of proven roll-out concept
Expansion projects to drive rapid growth
KEY BENEFITS TO SMEs
Debt offering.No warrants – no dilution of equity
Preserves cash Interest only, with cash interest L+5% and rolled interest of 5% payable at maturity
Enhanced debt capacity, cash flow lend - not limited to tangible security
Flexibility - No prepayment penalty fees and no annual monitoring fees
No automatic requirement for PGs
Its not just about the money - Additional support through “Breakthrough”
£1.2m Growth CapitalVideo technology
August 2014
£1.5m Growth CapitalChildcare and education
60 new jobs
50 new jobs
September 2014
£1.35m Growth CapitalVibration monitoring
62 new jobs
July 2014
£1.1m Growth CapitalPlumbing distribution
July 2014
£1m Growth CapitalEngineering consultancy
95 new jobs 20 new jobs
July 2014
£0.75m Growth CapitalCloud brokerage services
35 new jobs
May 2014
£0.75m Growth CapitalAutomotive
April 2014
24 new jobs
£0.5m Growth CapitalHealthy fast food chain
40 new jobs
October 2014
£1.6m of FacilitiesBakeries
45 new jobs
December 2014
£1.8m of FacilitiesServices
43 new jobs
September 2014
£2.4m of FacilitiesSupplier & Manufacturer
19 new jobs
December 2014
SOME RECENT SMEs WE HAVE SUPPORTED….
SUPPORTED BUSINESSES
CUSTOMER ADVOCACY
“It is mind-blowing that a bank would be thatentrepreneurial and supportive. They are a
breath of fresh air.”Paul Bradford, Southern Communications, CEO
“Santander gets close to you in terms ofunderstanding the business and our RelationshipDirector really understands the nuts and bolts of
what we’re doing and the issues we have.”Mike Bishop, Finance Director and CoFounder, YourVets
“I think the Growth Capital investment is a reallywell thought-out product. It allows us to draw
down funds as the company grows without having to keep going back to the bank.”Tim Hobbs, CFO, Vital Ingredient
“Before the deal we had 35 employees but onlyone sales person. Now we have the resources togrow the team and hire people to manage direct
sales, partners and channels.” Mat Atkinson, CEO, ProofHQ
“It’s fascinating to see that entrepreneurship isa genuine objective of Santander and not just words.”
Geoff van Sonsbeeck, co-founder,Isabella Oliver
“The Santander team got to know us individuallyand we felt the approach of the team was
sensible and pragmatic.” Graeme Scott, CEO, Bertram Nursery Group
“The expertise of the people who came in fromSantander was completely different from the
other banks... They could see the frustrations of asmall business. They also understood that a small
business needs time to do things.” Andy Hill, CEO, I Like Music
THANKYOU
PETER ABEL, DIRECTOR
SANTANDER GROWTH CAPITAL,
Tel: 07809 493791
Email: [email protected]
Website: www.santanderbreakthrough.co.uk
Growth Capital Investors
Introduction to BGF
Ned Dorbin12 May 2015
Growth Capital Investors
BGF is an investment firm that provides growth capital of £2m - £10m to UK businesses with turnover of > £5m.
Who we are.
Funding for growth and equity release
Investment of £2m – £10m for a minority stake
Long-term and patient capital, no forced exit
Access to huge network and support
Fast and focused investment process
Growth Capital Investors
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How are we doing?
Growth Capital Investors
Investment of £2m-£10m
Cash-in: to support long term growth
Cash-out: for existing shareholders
Equity stake of up to 40%
Always a minority partner – you retain control
Flexible structures – equity / loan notes
Meets the needs of the company and shareholder
What we offer. Working alongside the banks, BGF provides growth capital in a way that meets companies’ needs.
Growth Capital Investors
No closed fund pressures
Patient capital. No drag rights, no forced exit
Fair legal approach Less onerous investor legal protections
Fast and focused investment process
Minimises disruption and fees
More than money Access to impressive network and support
What we offer. Working alongside the banks, BGF provides growth capital in a way that meets companies’ needs.
Growth Capital Investors
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Growth Capital Investors
South West andSouth Wales
James Austin07872 819093
Ned Dorbin07800 682195
Alex Garfitt07770 582021
Paul OldhamRegional Director
07887 657697
Edwin Davies07880 384983
Greg Norman07557 747302
Sarah Ledwidge07557 232034
Daniel Tapson07964 904443
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YFM Equity Partners
Giles Whitman
12th May
2015
7373
YFM Equity Partners is a specialist equity investor based in the UK regions, investing in fast growing businesses at a point of transformational growth
We invest £1m to £10m in UK companies
We back ambitious management teams with a clear plan to create value
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· Step-change in revenue and profit, driven by:o Entering new markets / launching new products
o Acquisitionso Changing market dynamics
o Increased sales and marketing
· Often the result of change of ownership / de-risking
· Transaction types:o Growth capital; MBO; MBI; cash-out
What is transformational growth?
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· Strong management· Typically £0.5m-£2m of underlying EBIT
· Small losses OK for earlier stage growth capital dealso But should be budgeting profits within 12 months
o Minimum revenue £2m
· Invest in a broad range of sectors, but particularly like:
o Brand roll-outso Proprietary technologyo Niche market leaders
What else do we look for?
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· We are experienced investorso Founded in 1982 – we have over 30 years of experience, investing in
fast-growing transformational businesseso A regional office network - London, Leeds, Manchester, Birmingham
and Sheffieldo A team of 15 investment professionals
· We understand the nature of corporate transactionso We will ensure appropriate funding structures and plans are in place
· We deliver what we promise
Our Transformational Expertise
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· We empower management to deliver their plano Brings out the best in management teams
o We understand the difference between support and interference
· We work closely with our investee businesses o We have a broad network of advisers and Non Executive Directors to
assist
o We understand that not everything goes to plan
Our Supportive Partnership Approach
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Mangar InternationalInflatable lifting and bathing equipment.Powys
£4,600,000MBO
January 2014
Intelligent Office UKProcess outsourcing solutions to legal practices. Alloa
£4,890,000MBO
May 2014
Macro ArtSpecialist wide-format digital printer.Cambridgeshire
£2,100,000MBO
June 2014
Intamac SystemsRemote monitoring of key services in the home.Northampton
£1,000,000Growth Capital
June 2014
The Heritage Window CompanySpecialist manufacturer of aluminium windows.London
£3,171,000MBO
September 2014
2014 Highlights Investments:
Cambrian Park & Leisure Homes Manufacturers timber holiday lodges. Porthmadog
£3,000,000MBO
October 2014
Springboard ResearchMeasurement of retail performance data.Milton Keynes
£2,964,000MBO
October 2014
ACC AviationAircraft lease broking.Reigate
£5,170,000MBO
November 2014
Business CollaboratorCollaboration software to the construction sector Reading
£3,350,000MBO
November 2014
Wakefield AcousticsSpecialist industrial acoustic engineering businessCleckheaton
£1,800,000MBO
December 2014
Waterfall ServicesOne of the UK’s leading independent mid-sized contract caterers Location: Nationwide (Headquartered in Warrington)YFM Investment: 2007Return: 5.3x
Realisation:
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“The investment from YFMwill help accelerate the
business’ ambitious plans in the $3bn power solutions
market.” John O’Donohue, CEO, Poweroasis
Case study
Sector Telecomms
Location Swindon
Transaction Development Capital
Deal size £4.5m
Investment 2011
The business• Power management system that controls and manages the supply of power to remote
telecoms base stations
• Enables network operators to deliver capital costs savings, energy saving and revenue protection by reducing network outages
• A number of key strategic partners provide access to international markets
The strategy• Targeting a large and rapidly growing market
• Network power management will be critical in the future
• Market leading company with a more comprehensive and flexible product than any other competitor
• Well advanced sales and orders pipeline
• Strong management team
The developments• Supported the expansion of the sales and marketing in Asia, Africa, Europe and North
America
• Developed partnerships in strategic business areas
• Proving the scalability of the business model
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· We are experts at transformation
· We are very experienced
· We are supportive partners
· We have funds available and are keen to invest
Summary
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It is in the nature of venture capital investments that considerable uncertainties exist in relation to the ability of individual Investees to establish themselves as viable businesses.
As there will normally be no ready market in the securities of the Investees such investments will be essentially illiquid and may be difficult both to value and to realise.
Any proposed investments are likely to involve an above average level of risk.
Investment through a fund in developing businesses should be regarded as long term and as carrying a significantly higher degree of risk than more conventional forms of investment.
Any interests in a fund itself will also not be readily marketable.
Past performance of YFM Equity Partners or any of its subsidiaries and employees does not provide any guarantee of future performance.
This presentation has not been approved as a financial promotion by an authorised person within the meaning of the Financial Services and Markets Act 2000 “the Act”. It is exempt from the general restriction in s.21 of the Act on the grounds that it is directed only towards ‘Investment Professionals’ within the definition of Article 14 of the Financial Services and Markets Act 2000 (Promotion of Collective Investment Schemes) Order 2001 and Article 19 (5) of the Financial Promotions Order. It is only meant for investment professionals with professional experience of the subject matter. It is issued for information purposes only and should not be construed as advice, nor does it constitute an offer and should not be relied on by any other person. It may not be copied or distributed or otherwise made available to any person without the express written consent of YFM Equity Partners.
YFM Equity Partners invests through its subsidiary YFM Private Equity Limited which is registered in England and Wales, Co No: 2174994. Registered Office: 5th Floor, Valiant Building, 14 South Parade, Leeds LS1 5QS. YFM Private Equity Limited is authorised and regulated by the Financial Conduct Authority, FRN: 122120 and is ultimately owned by YFM Equity Partners LLP.
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