British Business Bank Investments Ltd provides £16.5m line to Northwest asset finance provider Kingsway under new expansion capital initiative
British Business Bank Investments Ltd, the commercial arm of the British Business Bank, has announced the first facility under its new expansion capital initiative, which supports finance providers who lend to smaller businesses.
The first transaction is a £16.5 million revolving credit facility for Kingsway, a Cheshire-based asset finance specialist. It is expected to increase Kingsway’s leasing capacity by up to £25m, supporting investment in plant and machinery across the UK.
The expansion capital initiative, developed by British Business Bank Investments Ltd as part of its Investment Programme, enables it to support the development of diverse debt finance markets more effectively.
Under the new initiative, British Business Bank Investments Ltd can make investments as sole investor, without the need for its investments to be match-funded. The initiative unlocks increased development capital to speciality lenders serving smaller businesses, provided the lenders can demonstrate the funding will leverage additional lending or otherwise be assessed as having a strong fit with the Investment Programme’s overall aims.
Since the Investment Programme began in early 2013, it has committed more than £120m to six asset finance providers.
Keith Morgan, Chairman of British Business Bank Investments Ltd, said:
“We see asset finance as an increasingly important option for smaller businesses looking to grow and invest, as evidenced by our recent Small Business Finance Markets Report, which shows strong growth in asset finance volumes over the last two years. We are keen to introduce more innovative ways to meet the growing demand for this type of finance, in particular leasing and hire purchase for plant and machinery investments.
“We are delighted to support Kingsway with this revolving credit facility through the new expansion capital initiative under our Investment Programme.
“The greater freedom and flexibility we gain from acting as a sole investor will enable us to make an even bigger impact on finance markets serving smaller businesses across the UK.”
Adrian Anthon, Managing Director of Kingsway, said:
“I am delighted that Kingsway is the first UK asset finance company to benefit from the British Business Bank Investments Ltd new expansion capital initiative.
“From our North West base, Kingsway has been supporting UK small businesses for almost 20 years and this new facility will enable Kingsway to significantly increase our lending to small businesses across the UK.”
Simon Goldie, Head of Asset Finance, Finance & Leasing Association, added:
“The expansion capital initiative is an important addition to the British Business Bank’s funding initiatives, and will increase Kingsway’s ability to support smaller businesses through asset finance. We look forward to seeing more FLA member firms working with the Bank to drive economic growth in the UK.”
Asset finance continues to grow in popularity, with the Finance & Leasing Association reporting a growth in asset finance new business – primarily leasing and hire purchase – of 11% in 2015, to £28.1bn (excluding high-value deals), the market’s second consecutive year of double-digit growth. The asset finance industry funded almost 32% of total UK investment in machinery, equipment and purchased software in 2015.
For further information please contact
Tom Nutt, Tom.Nutt@wearesevenhills.com – 0207 199 6191
Scott Shearer, Scott.Shearer@british-business-bank.co.uk
Notes to editors
About British Business Bank Investments Ltd
British Business Bank Investments Ltd is the commercial arm of the British Business Bank. It aims to earn a commercial return by investing through providers of finance to smaller businesses and small mid-caps, pursuing investments on a fully commercial basis without receiving any advantage from the government.
British Business Bank Investments Ltd is a wholly owned subsidiary of British Business Bank plc, the UK government’s economic development bank. Neither entity is authorised or regulated by the Prudential Regulation Authority (PRA) or the Financial Conduct Authority (FCA).
British Business Bank plc and its principal operating subsidiaries are not banking institutions and do not operate as such. A complete legal structure chart for British Business Bank plc and its subsidiaries can be found on the British Business Bank plc website.
The new Business Finance Guide, jointly published by the British Business Bank and the ICAEW’s Corporate Finance Faculty, is a unique guide that sets out the full range of options available for smaller businesses looking to raise finance. It also offers advice to help businesses plan for growth.
Kingsway is an independent provider of asset finance and leasing to UK small businesses, via a network of approved equipment suppliers and brokers. Based in Wilmslow, near to Manchester Airport, Kingsway was founded in 1997 and has been supporting UK small businesses for approaching 20 years.
British Business Bank Investments Ltd supported Kingsway with a £5m investment in February 2015. This £5mn commitment is superseded by the new revolving credit facility announced today.
About the British Business Bank and asset finance
The British Business Bank enables greater provision of asset and lease finance through a range of interventions. As well as supporting providers through British Business Bank Investments Ltd’s Investment Programme, the Bank is also working with the Finance & Leasing Association to widen the scope of the Bank’s Enterprise Finance Guarantee to include support for asset finance.
Asset finance providers have also benefited from the Bank’s ENABLE Funding programme, which aims to improve the ability of independent asset or lease finance providers to access more competitive funding via the capital markets, thereby increasing significantly the supply of leasing and asset finance to smaller businesses in the UK.
The Enable Funding programme has so far agreed facilities of more than £200 million to three non-bank asset finance providers – Henry Howard Finance (£51 million), LDF (£51 million) and Hitachi Capital (£100 million).