Shard Credit Partners has provided financing of £7.0 million to facilitate a transformational debt refinancing and shareholder reorganisation of Midwest Mechanical and Electrical Services Ltd (“Midwest”).
Midwest, headquartered in Wolverhampton with c.120 staff, was founded by Steve Lokucewicz in 1988 as a small electrical contracting business providing maintenance and project services to a selection of local clients within the West Midlands. In the following years, the business grew consistently and started to develop its strong reputation for timely and high-quality project delivery. In 2002, Steve’s son Paul Lokucewicz joined the organisation and laid the foundations to allow further organic growth by expanding the customer base across construction, defence and the NHS. Midwest is renowned for its strong, longstanding relationships with its customers and for providing solutions on complex mechanical and electrical engineering projects from design and installation through to ongoing building maintenance following project completion.
The transaction refinances existing lenders and allows the exit of original founder Steve Lokucewicz as he fully retires from the business. This facilitates increased equity ownership for Paul and the management team that has been creating significant value in recent years following their successful MBO in 2019, as well as improving the gender diversity of the board composition which is an important ESG focus for Shard Credit Partners and Midwest. Midwest is entering an exciting growth phase in the coming years with a strong orderbook and high-profile project opportunities in the pipeline.
Paul Lokucewicz, Managing Director of Midwest said: “The Midwest Directors were extremely pleased to welcome Shard Credit Partners on board to assist with the refinancing of our MBO allowing us to bring the wider management team into the board room. This has provided us with a platform to further fuel the growth of the business, the refinancing process was extremely smooth and we found that the Shard Credit Partners team quickly understood our business and its needs”.
Alastair Brown, CEO of Shard Credit Partners, commented: “Our recent refinancing of Midwest represents our first transaction in the West Midlands and our tenth investment from Direct Lending Fund I. Having been extremely impressed with Paul and the senior management team during early discussions, we identified an opportunity to put forward an innovative refinancing structure that was ultimately well received and successfully implemented during the summer. We are also pleased to have made an impact from an ESG perspective by facilitating the appointment of Natasha Coates to the board around the time of the transaction. We all look forward to supporting the business and contributing to its stellar growth trajectory in future”.
Greg Easter, Partner at Heligan Group said: “We are delighted to have worked with Midwest and Shard Credit Partners on this deal. Midwest is an owner managed business that has grown very impressively over the last ten years through high quality customer service and investment in people. The financing and support from Shard will enable the business to continue this growth through the incentivisation of key management team members. The approach taken by Shard Credit Partners throughout the process made them excellent to deal with: the team showed flexibility in structuring a deal that worked for all parties and a straightforward approach to negotiating the transaction documents”.
Legal advice to Shard Credit Partners was provided by Gateley Legal, led by Banking & Finance partner Andrew Madden, supported by Victoria Elliott and William Bowler from Gateley Legal’s Corporate team. Legal advice to Midwest was provided by Shoosmiths.
Business and transactional tax advice was provided by Ryecroft Glenton’s Business Tax Partner Simon Whiteside and Director, Simon Hopwood. Financial due diligence was provided by Ryecroft Glenton’s Grahame Maughan, Jon Routledge and Andrew Cameron.
Shard Credit Partners’ strategy is to become a leading provider of capital to entrepreneur and management-owned companies, VC backed growth businesses and private equity-owned companies focused on achieving transformational growth and expansion in the UK regions. During the past four years, Shard Credit Partners has invested more than £130 million in supporting regional Management Buy-Out transactions and M&A buy-and-build acquisition strategies, as well as growth capital expenditure financing.
About Shard Credit Partners:
Shard Credit Partners is an alternative investment fund manager focused on private credit strategies in the UK lower mid-market. Its funds seek to generate superior risk-adjusted returns from conservatively structured senior secured credit investments with equity upside. Fund strategies include direct lending and tech-focused venture debt.
In January 2021, William Chappel joined Shard Credit Partners to launch the Venture Debt strategy which will be focused on senior secured loan investments in businesses in the Software as a Service (“SaaS”) and Fintech markets across the UK tech sector. Shard Credit Partners plans to hold a first close on its new Venture Debt Fund in Q4 2021.
Shard Credit Partners is currently investing from its debut direct lending fund Shard Credit Partners Fund I, which held a first close in October 2017 at £90 million. Shard Credit Partners plans to hold a first close on its second UK lower mid-market direct lending fund during Q1 2022.
Shard Credit Partners invests in solid small to medium-sized businesses with strong management teams, supporting them by providing transformative growth capital and event-driven financing in support of innovation, growth and expansion. The fund invests in businesses across all sectors and throughout the UK.
The firm has a strong ESG focus; in particular, it is a strong supporter of female entrepreneurs and firms with meaningful female leadership, ownership and senior management.
Recent investments include the venture debt refinancing of PassFort Limited in May 2021, the venture debt financing for Rezatec Limited in August 2021, the financing in support of the acquisition of The Technology Group by Gradwell Communications in March 2021, as well as the MBI of JST Services Ltd in Scotland, the MBO and buy-and-build strategy of eQuality Solutions Ltd in the North-East of England, and the MBO of Chameleon Technology Ltd in Harrogate, North Yorkshire, each of which completed in December 2020.
In 2020, Shard Credit Partners ranked eighth in the Debtwire UK Direct Lender league table published by Acuris. Shard Credit Partners was recently awarded Alternative Finance Provider of the Year 2020 (North-east region) in the Insider Dealmakers Awards.
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