Beechbrook Capital has achieved a first close on its third UK SME focused fund, raising £120m, including the fund and separately managed account commitments.

This fund has attracted repeat and new institutional investors, including British Business Investments, the Greater London Authority Strategic Reserve and the Greater Manchester Pension Fund.

British Business Investments, a wholly-owned commercial subsidiary of British Business Bank plc, has made a £30m commitment to the fund, following previous commitments in 2017 and 2019 to Beechbrook’s two earlier SME Credit funds.

Beechbrook’s UK strategy supports UK small and medium-sized businesses with a turnover of between £10m and £100m and EBITDA of £1m and above. It provides mainly senior secured loans to non-private equity-backed companies, to support acquisitions, buy-outs, shareholder re-alignments, re-financings and general expansion plans.

Beechbrook Managing Partner, Paul Shea, commented: “We are pleased to announce the first close of our third generation UK SME fund and are grateful for the support we have received from both existing and new investors. Given the uncertainty created by the pandemic, providing flexible financing for SMEs is more crucial than ever. There remains an acute shortage of development and expansion finance available in the UK lower mid-market and we will continue to play our part in helping fund growth in this important segment of the market.”

Judith Hartley, CEO, British Business Investments said: “This £30m commitment from British Business Investments to Beechbrook Capital’s third UK SME Credit fund will help growing smaller businesses across the UK to access the additional investment capital they need to scale up. The purpose of British Business Investments is to promote greater diversity in the supply of finance, and this compliments Beechbrook’s own approach of providing a combination of debt and equity finance to established businesses seeking growth capital.”

First close for Beechbrook’s third SME fund follows the completion of the two final investments, CurrentBody and Complete Detection Systems (CDS), in the second SME Credit fund, which raised £130m and closed in March 2020.

Headquartered in Cheshire, CurrentBody is a leading home use beauty device ecommerce retailer. Beechbrook provided a flexible debt and equity solution to support the purchase of a majority stake in the business by ecommerce specialist investor and growth agency, eComplete.

Complete Detection Systems (CDS), is a Leicester-based specialist in the fire protection market. The management team is pursuing a buy and build strategy to expand across the UK and diversify their offering into other compliance areas such as water safety and electrical systems. Beechbrook has provided a debt and equity solution to support this strategy as the company makes further acquisitions.