Cabot Square Capital makes £25m investment in Henry Howard Finance PLC
Specialist financial services private equity investor Cabot Square Capital has made a £25m investment in Henry Howard Finance, in order to enable it to increase its provision of finance for SMEs.
Cabot Square believes that the shortage of SME financing from banks in the wake of the credit crisis has created a significant opportunity for Henry Howard – which is already established as a leading asset finance provider – to build on its experience and expertise in providing finance both direct to SMEs and as part of manufacturers and equipment vendors sales packages.
In particular the investment will enable Henry Howard to write more business using its own capital.
Cabot Square says that banks’ appetite to lend has been severely reduced by new regulatory capital requirements which are forcing them to adopt more restrictive lending criteria.
The lack of financing and the changing regulatory requirements are also potential headaches for business equipment vendors that use sales finance to help customers fund major purchases of equipment and infrastructure, from heavy machinery to sophisticated technology. These businesses risk losing sales if access to finance is withdrawn.
Richard McDougall, investment director at Cabot Square Capital said: “It has been a turbulent few years in the SME financing marketplace and that is making life complicated and frustrating for both SMEs and equipment vendors.
“This has created a significant opportunity for independent finance providers to step forward and become the long-term partner that SMEs and vendors can rely on to meet almost all of their finance needs.
“Henry Howard has already expanded the volume of funding that it offers by 20% in the last year alone. We are looking forward to working with its excellent management team to continue that success as financing provider of choice.”
Henry Howard is poised to further benefit from an expected re-shaping of the finance broker market as a result of the impending regulation of the sector by the Financial Conduct Authority. The increased regulatory requirements are expected to prompt many smaller brokers to close shop, which will leave SMEs and vendors looking for alternative providers.
The investment will also enable Henry Howard to further develop its comprehensive funding options and technological infrastructure, including the immediate launch of an online funding portal which offers instant financing decisions to vendors.
Mark Crook of Henry Howard Finance added: “It is great to be working with Cabot Square who have an excellent track record of building highly successful financial services and lending businesses.
“The new investment will enable us to use our expertise and funding to allow Henry Howard to write much more business in-house, and to develop the range of financing solutions that we are able to offer. The Henry Howard culture is to be responsive and flexible, and that is exactly what SMEs and vendors are crying out for.”
Cabot Square Capital was advised by Herbert Smith Freehills and Grant Thornton, and Deloitte acted as advisers for Henry Howard’s shareholders.
Cabot Square Capital has an 18 year history of building leading financial services businesses. Recent investments include: LDF (working capital loans to professional services firms and SMEs), Asset Alliance (commercial vehicle finance), Centric (invoice finance to SMEs), 5D/Interbay (small ticket commercial mortgages) and Signature Private Finance (bridge lending to small property developers). Cabot Square Capital manages funds on behalf of long-term institutional investors and is currently investing its fourth fund.
