FDC launches new £100 million debt fund

Alternative fund manager, Frontier Development Capital (FDC), has announced the first close of its latest fund, the FDC Debt Fund (FDC Debt LP). The £100m debt fund achieved a first close of £75m and will be announcing its first deals within the coming weeks.

The FDC Debt Fund supports small and medium sized businesses based in the UK that need flexibility in their funding structure, particularly in these uncertain times. The fund can provide loans of up to £7.5 million to support trading businesses and property developers throughout the UK.

FDC, headquartered in Birmingham, is a regional fund manager that has been lending directly to SMEs nationwide since 2016. Recent FDC deals include providing a £3 million loan as part of the funding for the buy-out of Hammonds Furniture based in the East Midlands, and £5 million invested in Armighorn Group, a national care home group headquartered in Birmingham, to support its acquisition strategy.

The Fund has been made possible due to commitments from West Midlands Pension Fund (WMPF) and British Business Investments, £75 million in aggregate. Both aim to support the growth of UK SMEs by mobilising private capital to increase the availability and flexibility of finance.

Jill Davys, Assistant Director, Investments, West Midlands Pension Fund, said: “West Midlands Pension Fund is delighted to be supporting FDC in providing funding to regional SMEs at this critical time for the economy, whilst also delivering on the broader aspiration of the Fund to support local businesses and the local economy, delivering dual benefit of providing a competitive return to support meeting the Fund’s investment return.

“This latest investment with FDC follows on from previous investments made by the Fund which have helped not only deliver the financial returns the Fund needs to pay pensions but also supported growth in the local regional economy.”

Judith Hartley, CEO, British Business Investments, said: “British Business Investments aims to increase the supply and choice of finance to smaller businesses across the UK, and we achieve this by supporting regional fund managers, like FDC, on their growth journey. This allows FDC to raise more substantial funds and support more SMEs, particularly those based in the regions.”

Sue Summers, CEO of FDC, said: “We are grateful to both existing and new investors for their support. Raising a Fund such as this in these difficult times is testament to our incredible team and a business model that supports regional SMEs, the engine room of the UK economy.

“For almost four years, we have worked closely with investee businesses spanning a broad spectrum of industries and business strategies. The creation of the FDC Debt Fund is the next step for FDC as a supportive, intuitive fund manager that understands real businesses. That’s why we already have deals in the pipeline that are completing imminently despite the uncertainties in the UK economy.”

The legal name of the new fund is the FDC Debt LP.