Magnetic North: Making the region attractive to global institutions

By Gary Davison, TDC 

A decade on since we established the concept of a Private Debt Fund in Manchester, a number of principles have remained central to our thinking and strategy such as team culture, value creation over-profit, relationships, agility, consistent decision making and importantly – relevance.

It is the last point that we constantly return to.  Being relevant to the Market.  The Market being our people, our investors and of course the companies we want to invest in.

For a successful team, the requirement for relevancy is vital.  Circumstances and ambitions will be ever-evolving and staying relevant to the collective by supporting the development of meaningful skills, engaging in strategy and creating a pathway to increase compensation to help meet longer-term financial goals is essential. As,  of course, is working on the best assignments and all these factors are essential to attracting and retaining a quality team.   

Our investor outlook has also evolved.  What was perhaps attractive a decade ago is possibly less so today.  The changing interest rate environment stemming from a series of well documented market shocks being the primary reason.  Investor pools that cornerstone the funds have gravitated towards a more measured returns profile and are attracted to scale and lower levels of credit risk.   Capital being the critical ingredient for any private fund – and the competition for it intense – so a strong track record and being able to offer an investment strategy that fits with, and is relevant to, the needs of an investor is essential.  

For borrowers’, private capital and alternative credit strategies are now commonplace.  Banks continue to provide much of the transaction and corporate funding in the UK however the credit funds are more likely to be the source of capital for most leveraged buyouts.  

In a commoditised debt finance market, differentiation can be difficult and often results in price being driven downwards and/or risk upwards, a combination any fund manager (or investor) rarely wants. So differentiating by being relevant is key.   At TDC we aim to be relevant by targeting a specific market segment which is aligned to our experience and set up  – often termed as the lower mid-market.  Providing experience and expertise, short lines of communication, deep pools of capital to support growth and M&A and also by having empathy with the people with whom we do business.  

Our Manchester base assists with this differentiation. This is not to be confused with regional or local, we are a national business based in Manchester.  But this is not typical – London is the draw.  Within the financial services industry we are proud of the London effect, it is highly credible, exciting, it attracts global talent and we all seek to leverage its influence.  But are businesses that operate in the lower mid-market relevant to it?  Are loans of £20m relevant to a market that accounts in £bn’s?   We would argue not – but from our Manchester base in the UK’s second city, to the team at TDC such factors are very interesting, exciting even and, of course, relevant. 

TDC’s Managing Partner, Gary Davison, established TDC in 2015 and since that time has been instrumental in raising over £1.1bn of capital for investment in UK SME’s and Lower Mid-Market businesses.  He drives TDC’s strategy and leads the growing investment and portfolio management teams alongside fundraising and investor relations.  As head of TDC’s Investment Committee, Gary is also responsible for ensuring TDC maintains a high level of investment quality with consistency of decision making thereby ensuring the attainment of top decile investor returns through class leading portfolio management.