Impact Investing: doing well by doing good
4 July 19
4 July 19
It is now over 10 years since the financial crash and SME funding remains one of the most persistent problems impacting the UK economy. Many firms are confronted with limited growth opportunities and short life cycles in an underserved marketplace. However, despite the challenges, there remain certain sections of the business finance market that function well today. Smaller SMEs can access finance from new lenders such as peer-to-peer platforms. And larger business borrowing amounts in excess of £10m can be well served by high street banks and specialist debt funds.
The real issue is funding for mid-sized SMEs, who fall into the missing middle; too big for microfinance initiatives but too small for commercial banks. In 2018, this ‘middle market’, consisted of approximately 35,000 companies, employing a total of 4.2 million people. Many of these growing and profitable SMEs require sophisticated financing between £500,000 and £5m to fund growth, stock or changes of ownership, such as MBOs, and are faced with very limited options. There are, however, a new breed of alternative finance providers emerging to support these businesses.
Founded in London in 2004, Triple Point is an FCA authorised alternative investment manager with over £1.4bn in AUM and over 117 employees. With a rich history of supporting small to medium-sized businesses, Triple Point has funded a diverse range of organisations (over 150,000 UK SMEs and rising), helping them achieve their objectives. Today, the debt arm of Triple Point is a thriving leasing and lending business with a focus on financing business critical assets or providing core essential business funding. Triple Point targets a diverse range of underserved, growing SMEs.
“For Triple Point, growth isn't just about financing start-ups. Growth is about identifying those good established businesses that need to make that next step; the need to move beyond employing 10 or 15 people making profits for the entrepreneur. The goal for us is to help that business grow to enable a management team to expand their product base and take the business to the next level. We are not a speculative growth debt lender. What we do is support good businesses, with positive management teams, who have a realistic plan for growth.” Neil Richards, Partner and Head of Leasing and Lending at Triple Point.
“After strategic research undertaken by the investment team, our core belief was reinforced, that banks, whilst lending to SMEs, are only prepared to engage on amounts above £10m. This has left a huge demand for financing successful mature businesses in that space, who still need finance to achieve their growth aspirations but do not meet the £10m+ criteria. Many of these businesses are consistently profitable, ambitious and well-managed, but are not able to talk to a bank manager.”
SME Deal Flow
Over the past 12 months, Triple Point have provided over £50m of loans to companies spread across the UK including Cornwall, Somerset, Ramsgate, Horsham, London, Worcester, Lowestoft, Sheffield, Leeds and Newcastle. Furthermore, in the last year, the team has met with over 200 companies and introducers who are looking to raise finance for SMEs.
By engaging in a practical, positive and pro-active manner they have found many high-quality businesses looking for debt finance which have been frustrated by the lack of available capital and the pace of progress from more traditional funders.
These loans have in turn supported a number of owners and management teams to realise their ambitions of growing their businesses, generating total revenue of £250m and supporting employment for 2,400 people. The loans provided are unlocking the potential within these fantastic UK businesses.
Triple Point Estate Planning Service (‘TPEPS’)
Triple Point gives investors access to this unique deal flow through the Triple Point Estate Planning Service (‘TPEPS’). In 2013, the Service was launched, offering investors two unique and important investment opportunities both with compelling track records of delivering year on year solid returns.
TPEPS enables private investors to access the commercially attractive trades of leasing and lending, formerly the preserve of banks and big financial institutions. The two investment opportunities are to either TP Leasing Ltd or Navigator Trading Ltd or a blend of both.
TP Leasing Ltd (‘TPLL’) is a leasing, lending and infrastructure finance business. It focuses on providing a smaller number of high value leases to good quality customers, like an MRI scanner or an ambulance to an NHS Trust, or an asset such as a refuse collection vehicle to a local authority or corporate. The target return to Triple Point’s clients is 1.5% to 2.5% (net of fees).
Navigator Trading Ltd (‘NTL’) provides different types of backing to UK based small and medium-sized enterprises (SMEs). It focuses on providing large numbers of smaller leases and loans, to a diverse spread of businesses, and manages risk by carefully analysing the underlying deals – individually and in aggregate. Just like TP Leasing Ltd, NTL has demonstrated consistent achievement of its targets, delivering annualised returns to Triple Point clients comfortably within its 4.0% to 6.0% target (net of fees).
Triple Point’s goal is to build on our track record of delivering consistent returns for investors while supporting the growth potential of a diverse range of fantastic UK-based SMEs. If you have any further questions about our Estate Planning Service, or any of our other investment solutions, which include our Income Service, Impact EIS Service and Venture Fund VCT, please get in touch on 020 7201 8990.
Risk Warning: The Triple Point Estate Planning Service places capital at risk. As with any investment, there is no guarantee that the target return will be achieved and investors may get back less than the amount they invested. Past performance is not a guide to future performance. Tax treatment depends on the individual circumstances of each client and is subject to change.