Updated: 23/07/2014
Financial services private equity investor Cabot Square Capital has invested £25m (31.6m) in broker Henry Howard Finance (HHF), in order to enable it to increase its provision of finance for SMEs.
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By GlobalDataHHF works in a range of industries, including telecoms, vending, IT and office technology.
Speaking with Leasing Life, Richard McDougall, investment director at Cabot Square Capital, pointed out Cabot had a track record of investing in financial services providers, going back to 1996, including commercial vehicle leasing and contract hire company Asset Alliance.
When asked why Cabot specifically chose HHF, he said Cabot was impressed with the brokers performance over the previous years, and talks between management had been going on for over 18 months.
McDougall added that it was a particularly interesting time for asset finance, for two reasons. One was: "There is a combination of these larger providers pulling out of the market, including historically ING and some of the larger clearing banks moving away from the provision of this asset class. So there is a great opportunity to build what we call the next generation of funders into that market."
"On the other side of the spectrum, there is the increasing oversight of regulation. We expect a decent amount of fallout among the smaller broker community. And that will result in a number of people who have used that as their avenue to generate finance needing to find alternative providers."
In a release, McDougal 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."
As part of the investment, Cabot has taken a majority stake in the business.
Mark Crook, Henry Howard Finance, said "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."
