The British Business Bank has agreed to provide a £51m facility to LDF, a non-bank finance provider, to fund a portfolio of newly originated small business asset finance receivables. The transaction, which is 50% guaranteed by the European Investment Fund, is the second of the British Business Bank’s ENABLE Funding programme, which aims to increase significantly the supply of leasing and asset finance to smaller businesses in the UK. It follows a £100m facility provided to Hitachi Capital (UK) Limited in October 2015.
Peter Alderson, Managing Director, LDF, said: “LDF are delighted to be working with the British Business Bank on this exciting initiative. Access to finance, particularly for asset procurement, remains a critical barrier to success for many smaller businesses and making this more readily available is something that we are fully behind.
“We already deliver significant support to this sector, providing over £40m of finance in January alone. With strong ongoing support from our shareholder, Cabot Square Capital, and our recent acquisition of asset finance specialist, First Independent Finance (FIF), we have very ambitious plans for growing our presence in the SME market.
The combination of LDF’s scale and stature, teamed with the strong asset finance heritage of FIF, increases both our geographical presence and our potential client base. With 5000+ clients, our special expertise lies in finance for professional firms and corporate SMEs. We believe that this facility will enable us to further grow that base and also provide a higher level of support, to a significant proportion of that client base.”
Reinald de Monchy, Managing Director, Wholesale Solutions at the British Business Bank, said: “This second transaction in the ENABLE Funding programme will further boost the availability of asset finance for businesses across the UK. We are particularly pleased to be able to be working with LDF, which is a high-growth lender, to help it expand its funding programme, which has already supported so many businesses across the UK.
“We now have provided two facilities totalling £151 million and we anticipate further transactions throughout 2016. Our intention remains for these facilities to be refinanced through the capital markets once we achieve a required critical mass of circa £300 million or more.”
Pier Luigi Gilibert, EIF Chief Executive, said: “We are delighted to be partnering with the British Business Bank again and to be guaranteeing this innovative finance facility for the benefit of SMEs. Through the ENABLE Funding programme we can help UK non-bank finance providers to offer additional financing solutions for SMEs and small MidCaps. This EIF guarantee now brings the total finance available under this programme to over £150 million which is a substantial boost for UK entrepreneurs. We are very pleased to support both the British Business Bank and LDF in their financing campaign for businesses.”
The ENABLE Funding programme, which has been developed as an aggregation vehicle, will allow LDF to expand substantially its provision of asset finance to smaller businesses.
In order to build the critical mass necessary to refinance the assets, the programme will be announcing similar agreements with other funders during 2016. Facilities will range from around £25m to £150m, and the programme will aim to refinance the warehouse facilities when receivables total approximately £300m or more. This refinancing will allow institutional investors access to a large and highly diversified pool of SME debt.