There are numerous scenarios where a senior debt provider will not provide funding (in senior debt or with other traditional bank working capital products) at the level required for a business, based on appetite, experience, or loan book concentration.
There are also situations where entrepreneurs of good SMEs would like additional capital to expand their business more rapidly than their current free cashflow generation will allow, or to realise some personal wealth whilst continuing to run and grow their business.
Fortunately, there are many options to help capitalise or fund a business, and RadiusCF are well placed to assist with the option that is right for the situation.
An institutional fund is an investment fund with assets held exclusively by institutional investors. Typically these funds all have specialisms, with lots being the investment arms of pension funds – meaning that they can have access to large pools of capital if the opportunity is right and the scope for growth is large enough. These investment funds are sophisticated stakeholders and relationships with them and their respective advisory teams needs carefully managed, but these can be incredibly potent relationships to build.
Growth capital options have become very fashionable and for good reason: they can be used by existing shareholders to realise some money and transform their personal wealth, while also allowing new funding to come into their business (paired with new drive and skills from the private equity providers) to develop the business and drive performance upwards.
RadiusCF have excellent contacts with various seed equity and private equity providers.
Mezzanine funding is a specific type of bridging finance – the main difference being, however, that mezzanine loans are typically not backed by real estate as security.
Mezzanine funding fills the gap between the owner’s equity and traditional financing, and is typically used for growth financing and buyouts or other types of transactions involving private equity.
A bridge loan is a short-term financing option that can be used by a business when there is a short-term need for financing (typically between six months and three years) and is usually backed by property. The bridge loan is then either repaid fully or is replaced by long-term financing.
CASE STUDIES
Our client provides a bespoke lending product and required additional capital for expansion of their oversubscribed product. We undertook market research into similar other providers and, after a detailed process in selecting a funder, we underwent a due diligence process, getting a facility approved to help the continued growth of the client.
We worked with a client to get offers of seed capital into their business. The business was developing cloud-based software that provided a new and bespoke all-in-one platform for a wide range of day-to-day activities. We prepared pitch decks for the client.
We have a property client who required mezzanine funding. At the time of the requirement much of their wealth was tied up in illiquid assets, the client was required to refinance and their replacement senior debt provider could only provide a certain level of debt – leaving a funding gap. The senior debt provider took first ranking security and did not permit a second charge holder. We negotiated a deal with a mezzanine lender to provide funding on the strength of the rent roll of the asset and a clear plan to repay them within a certain timeline. This repayment happened three and a half years after the initial lend and was facilitated by free cashflow and a refinance of the asset.
Our client was a retail business with a large amount of property and land, and with a lot of wealth tied up in large stock items. Unexpectedly, the borrower’s debt facility was not renewed by its senior lender – with little notice at the end of its facility. We guided the borrower to a bridging finance provider, who was able to provide the business with a solution based on the collateral to offer. This bridge was then followed up by a refinance to another senior debt provider c. 18 months later.