NEWS & MEDIA
Shard Credit Partners Limited Holds First Close on New £75 million Venture Debt Fund I15 June 2022
Shard Credit Partners Limited announces the successful first close of its inaugural UK technology-focused venture debt fund, with £16.5 million in commitments from UK and European institutional investors, alongside UK technology industry entrepreneurs. The fund will make investments in senior secured loans with equity warrants to venture capital backed businesses in the B2B SaaS and Fintech sectors located throughout the UK.
Shard Credit Partners Limited’s new fund will target borrowers with annual recurring revenues of at least £2.0 million, that are finding it increasingly difficult to source long-term financing from traditional lenders. The fund will provide flexible venture loan capital in support of sales growth, through increased expenditure on marketing initiatives. Typical loan sizes will range between £2.0-6.0 million per borrower, with maturities of up to five years.
The fund has already completed two investments with total commitments of £6.5 million ahead of first close. This included the fund’s first exit in December 2021, PassFort, which generated a total gross IRR of 249.2% in just six months (1.8x multiple on invested capital). The fund aims to complete around 15 investments per annum during the three year investment period.
Venture debt is becoming increasingly popular with high growth technology companies globally in recent years. The asset class is highly developed in the United States, having positively tracked the strong growth in the venture equity market during the last two decades. The venture lending market is in its infancy in the UK and remains an area that is materially underserved, which has created an opportunity for innovative private credit managers to raise dedicated technology venture debt funds.
Market demand for venture debt in the UK is being driven on the back of very strong growth in the technology venture capital sector over the past decade, which now comprises approximately 13,000 post series A technology companies. This represents a significant addressable market opportunity for specialist UK technology venture debt funds, such as the one launched by Shard Credit Partners Limited.
William Chappel, Head of Venture Debt for Shard Credit Partners Limited, said “We are delighted to hold our first close of the fund and we look forward to continuing to support fast-growth businesses across the software as a service and fintech sectors. We aim to become the ‘go-to’ debt provider for venture capital-backed high growth technology businesses in the UK”.
Alastair Brown, Chief Executive of Shard Credit Partners Limited, commented, “The successful launch of our inaugural UK technology venture debt fund, just one year after launching this unique strategy, is a testament to the hard work of everyone that has been involved and is something to be proud of. It further cements our position as a specialist private credit manager in the UK and continental European direct lending marketplace, successfully investing in strategies having a senior secured risk profile and generating high teens double digit gross returns for our institutional investor base”.
Shard Credit Partners Limited is currently in advanced discussions with several UK and international institutional investors with regard to participating in subsequent fund closes throughout summer 2022. The target fund size at final close is £75 million, with a hard cap at £100 million, by June 2023.
Shard Credit Partners Limited has a strong focus on ESG across all its private credit investments and has historically been a strong supporter of female entrepreneurs and firms with meaningful female leadership, ownership, and senior management. No less than 80% of its investee companies have female board representation and 60% have mixed sex equity ownership, a direct result of Shard Credit Partners Limited’s implementation of ESG covenants and ESG margin ratchets in its loan agreements and investment documentation as standard.
The funds team at Stephenson Harwood led by Partner Sarah de Ste Croix and supported by Arooj Khan and Hugo Mayes, provided fund formation advice to Shard Credit Partners Limited. The funds team at BDO, led by Partner Nicoletta Papademetris, supported by Tina Agnosteva, David Tran and Matt Barr, provided fund tax and structuring services to Shard Credit Partners Limited.
About Shard Credit Partners Limited:
Shard Credit Partners Limited 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 SME direct lending and tech-focused venture debt.
Shard Credit Partners Limited is currently investing from its debut direct lending fund Shard Credit Partners Fund I, which held a first close in October 2017 at £90.2 million. Shard Credit Partners Limited plans to hold a first close on its second UK lower mid-market direct lending fund during Q4 2022.
Shard Credit Partners Limited 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 funds invest in businesses throughout the UK.
Recent investments include the venture debt financing for Rezatec Limited in August 2021, the refinancing and shareholder reorganisation of Midwest Mechanical and Electrical Services Ltd in August 2021, as well as the financing in support of the acquisition of The Technology Group by Gradwell Communications in March 2021. The SME direct lending fund also funded 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 (UK) Ltd in Harrogate, North Yorkshire, each of which completed in December 2020.
In 2020, Shard Credit Partners Limited ranked eighth in the Debtwire UK Direct Lender league table published by Acuris. Shard Credit Partners Limited was recently awarded Alternative Finance Provider of the Year 2021 (North-East region) at the Insider Media Dealmakers Awards.
Shard Credit Partners Limited is an Appointed Representative of Shard Capital AIFM LLP, authorised and regulated by the FCA (number 615463).
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