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UK Private Debt Research Report
Published 11 Feb 2021

This report is the first to examine Private Debt for smaller and lower mid-market businesses, and seeks to increase awareness of this funding type in two main groups. First, businesses with fast growth potential and their advisors, who might not be aware of the strengths and benefits of Private Debt as a funding option and, second, potential investors who, while well aware of venture capital and venture growth funds, might not have considered the potential returns that Private Debt investments can offer.

High street lending to smaller companies is typically arranged through business banking divisions, where structures and underwriting processes tend to be designed to service a standardised product offering, at volume, to less risky borrowers. Whilst this approach suits many firms, Private Debt fills a gap in the market for companies with more complex financing needs, where loans may be justified on future cash flows, rather than physical asset security.

This bespoke and flexible nature of Private Debt makes it an attractive option for these types of businesses, including those which are looking to restructure. As the economy recovers, it may prove to be a particularly suitable source of capital for companies coming out of the Covid-19 downturn. Looking forward, it can also provide a means to drive sustainable economic growth by funding investment into innovation and productivity.

Since the last financial crisis in 2008, Private Debt has become an increasingly important source of finance for smaller companies that are seeking to grow quickly, with over £1bn of growth-specific finance provided to such businesses by Private Debt funds during 2018 and 2019.

Private Debt is also an important tool to consider in supporting the government’s aim of levelling up the economies of the regions and Nations of the UK. As outlined in this report, this type of finance is being used extensively outside London, with four in five deals and nearly two thirds of the £18.4bn of Private Debt in 2018 and 2019 being provided outside the capital. This is mainly due to the large volume of transactions involving investors that have received government support.


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Further information

FOR FURTHER INFORMATION PLEASE CONTACT THE BVCA

 +44 (0)20 7492 0400

 research@bvca.co.uk