Debt lender raises further £30m following record year
Fast-growing finance provider Frontier Development Capital (FDC) has raised a further £30m from two of its existing investors after completing a record year for investment.
The additional funding, which comes from West Midlands Pension Fund and British Business Investments, will increase the size of its FDC Debt LP fund to £105m and bring its total funds under management to £445m.
Birmingham-based FDC approved more than £141m of investment for SMEs and property developers across the UK in the 12 months to the end of March 2023 – up 76% on the previous financial year and almost four times the amount it invested four years ago.
Key deals during the year included a £2m investment to back a management buy-out of Hertfordshire-based sales enablement consultancy Mentor Group; £1m growth funding to support the acquisition of three compliance companies by Solihull-based health and safety firm Opus Safety; and a £9m investment to enable Tamworth Cornerstone Housing Association to almost double the number of properties it owns to help families at risk of homelessness.
FDC, which is based in Birmingham with offices in Manchester and Bristol, supports smaller businesses and property developers nationwide with debt funding of £1m to £20m. It has been lending directly to businesses since 2016.
Rachel Brothwood, executive director of pensions, West Midlands Pension Fund, said: “We are excited by the opportunity to commit additional capital and be able to contribute to the strategy and FDC growing in strength. The additional capital will enable FDC to provide funding required to support and grow fundamentally sound small and medium-sized enterprises while providing attractive risk-adjusted returns in a manner that is well aligned to our overall strategy and responsible investment approach. The recent partnership with Mercia highlights the growth and future ambition of the business with benefits achieved through synergies and complementary skill sets.”
Judith Hartley, CEO, British Business Investments, said: “Following our earlier commitment to FDC’s Debt Fund in 2020, we are pleased to be making an additional commitment of £10m to the Fund. Our increased commitment allows FDC to support further lending to smaller businesses across the UK, and particularly in the regions.’’
In December last year, it became part of Mercia Asset Management plc.
Sue Summers, chief executive of Frontier Development Capital, said: “We are grateful to our investors for this additional capital, which will enable us to extend our work in supporting the growth of SMEs. It comes after a landmark year in which we have approved a record amount of investment and joined forces with Mercia, which shares our passion for helping SMEs to thrive through the provision of flexible finance.
“Being part of Mercia will support our future fundraising efforts and help us identify even more potential lending opportunities. We look forward to further growth in the year ahead as we continue to establish FDC as a go-to provider of capital across the UK regions.”
he Freeths legal team was led by private funds partner George Metcalfe.
He commented: “We are delighted to have advised FDC on its latest raise, and it is a pleasure working with the FDC team and their investors. The deal also demonstrates our strong credentials in supporting fund managers operating in the SME investment arena, which we look forward to continuing to grow.”