The UK government’s economic development bank the British Business Bank has committed £50 million to a new fund aimed at helping to scale founder-owned SMEs.
Soho Square Partnership Capital Fund II will seek to help established SMEs that are considering acquisitions or technology investments or undergoing succession events. It will target businesses active in sectors designated as key growth markets in the government’s industrial strategy, which focuses on digital and technology and professional and business services.
Loans will be provided to companies with EBUITDA of up to £15 million and turnover of up to £200 million. At least 75 per cent of the fund is to be invested in the UK.
Blair McDougall, Minister for Small Business and Economic Transformation, said: “This commitment backs dynamic SMEs in key sectors, helping them scale, create jobs and drive growth, to raise living standards across the UK.”
Investee companies can also receive advice from UK-based partnership capital firm Soho Square, which will provide the kind of support typically offered by private equity teams.
With traditional bank lending often not flexible enough for smaller businesses and private equity investment often leading to ownership or sale proceeds being significantly diluted, Soho Square is seeking to provide SME owners with the capital needed to scale their businesses.
Adam Kelly, Managing Director and Co-Head of Funds at the British Business Bank, said: “This commitment is directly addressing a gap in the debt market. It will unlock flexible capital solutions for established businesses with strong growth potential, an area currently underserved by other lenders.”
Walid Fakhry, co-managing partner at Soho Square Capital, commented: “The bank’s backing lets us do more of what we set out to do: give founder-owned businesses the institutional capital they need, on terms that let them stay in control and keep building.”
“That is what our partnership capital is about, and having the bank behind it means more high-quality UK businesses can take their next step without giving up the reins.”
