Thursday 13 December 2018

Lender Growcap lines up €30m for SME deals

Dublin firm providing trade finance to businesses in UK and Ireland

Growcap is one of a swathe of non-bank lenders that have popped up in recent years. (stock photo)
Growcap is one of a swathe of non-bank lenders that have popped up in recent years. (stock photo)
Gavin McLoughlin

Gavin McLoughlin

Non-bank lender Growcap Finance is aiming to inject as much as €30m into SMEs over the next 12-18 months.

The Dublin-based business provides finance to Irish and UK-based SMEs. Director Colm O'Reilly told the Sunday Independent that the company is targeting firms with turnover and a balance sheet in the region of €1m.

Established around a year ago, it provides a trade finance product. This involves paying for goods being purchased by a client and then being repaid by that client over time.

"We're agnostic about sectors," O'Reilly said. The company has been backed by Enterprise Ireland and a number of Irish and Chinese investors.

It has a facility in place with Investec in the UK to facilitate its lending. O'Reilly said that after the 12-18 month period, the company will be looking at opportunities in continental Europe.

"What we've noticed is there's further opportunities in Europe, where there are similar issues ... banks have merged or the product offering into the SMEs isn't the same.

"We've been contacted by a number of Spanish companies and a number of French companies who are having similar issues around financing purchase orders," O'Reilly said.

Growcap is one of a swathe of non-bank lenders that have popped up in recent years. Tighter lending from the banks on foot of the crash has led a number of businesses to pursue opportunities in the area of SME financing.

The Ireland Strategic Investment Fund has invested in a number of businesses in this area, including American credit provider Muzinich which wants to lend to SMEs here.

ISIF has also invested in Finance Ireland, run by Billy Kane, formerly chief executive of Irish Permanent. Also active in the sector is Capitalflow, owned by UK private equity firm Pollen Street Capital.

Earlier this month the Sunday Independent revealed that British non-bank lender Beechbrook Capital is seeking to raise €100m for a fund targeting Irish SMEs.

The fund would provide both debt and equity financing to Irish businesses. Beechbrook is in talks with a number of "anchor" investors for the fund.

It said it would have a strong regional focus and will be based in Cork, with another office in Dublin.

Beechbrook hopes to start making investments in the second half of the year, primarily targeting medium-sized businesses.

It said typical investments will range from €2m to €6m.

Beechbrook managing partner Nick Fenn said investing in Ireland was "an exciting opportunity".

"Establishing a presence on the ground will enhance Beechbrook's regional presence and help support SMEs in a fast growing economy," Fenn added. The company has made more than 50 investments across Europe.

Sunday Indo Business

Business Newsletter

Read the leading stories from the world of Business.

Also in Business