YFM launches MEZZ finance product for SMEs
THE North West Fund for Development Capital, managed by YFM Equity Partners, has launched a mezzanine finance product for growing businesses in the North West that require up to £2m of finance.
The MEZZ product is aimed at businesses that need more finance than their bank will provide to grow their business – be it for expansion plans, to raise money for capital expenditure, to develop new markets, recruit new staff or to fund cash flow needs – but do not want to raise traditional equity finance.
The product, offering between £250,000 and £2m, is available to North West companies more than five years old with annual profits greater than £250,000. The investment will be in the form of a fixed rate loan note with an option to acquire up to 10% of the equity.
Simon Cleaver, investment director at YFM, said the product was designed with the particular needs of North West businesses in mind after extensive consultation with local business advisors and chief executives of small businesses throughout the region.
He told TheBusinessDesk: “It fills a gap between what the banks are prepared to do and traditional equity structures. Fundamentally it’s a loan with an equity option but it gets over the hurdle of a business having to give up equity.
“Although we have done mezzanine finance before we have refined it and come up with the product in conjunction with the people we having been talking to.”
Joseph Bergin, head of YFM Equity Partners for the North West, added: “We understand how frustrating it is for businesses in these challenging economic times who are struggling to secure finance. Our product gives them the benefits of an injection of new funding without them having to give up a large shareholding.
“We have the right product at the right time to help the North West’s hard working businesses grow.”
MEZZ will sit alongside YFM Equity Partners existing development capital product EQUITY, which is suitable for younger fast growing businesses looking for investment of up to £2m.
The £45m North West Fund for Development Capital is one of six specialist funds that make up The North West Fund, a £185m Investment Fund available for SMEs based in, or relocating to, the North West. The North West Fund is financed by the European Regional Development Fund and the European Investment Bank.
