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Caple supports management buy-out for waste management business
SME credit fintech Caple has supported the management buy-out of Serious, a sewage, grease and waste-water management company, with a £1m long-term unsecured loan.
The loan has enabled existing managing director Jeremy Proctor, who has been running the business for the last four years, to buy out the founding shareholders with the help of several partners. The founding shareholders were non-operational.
The MBO will enable the firm's next phase of growth. The management team can now implement its plans and invest in the business. As a result of the transaction, the business expects to grow by around 50% in the next two years and create 10 to 12 new jobs.
Asset-light firms such as Serious often find access to secured lending a challenge because they do not have the additional assets to offer as security to banks. Banks generally need customers to put up tangible assets as collateral for loans, so raising additional finance for an MBO was not open to Serious.
"Serious is a successful business with an excellent management team," says Dominic Buch, co-founder and managing partner of Caple. "To invest in the business that team needed to be able to buy out the retiring shareholders. Our deal demonstrates how we can support a new generation of owners with the finance they need to innovate, implement their expansion plans and drive growth.
"With the economy still recovering from Covid, we need to support this new generation of owners to provide the growth and jobs that the UK urgently needs."
Staffordshire-based Serious serves more than 15,000 commercial and domestic customers from six UK depots. These include Marston's, Whitbread's and Admiral Taverns from the pub and leisure industry. Customers also include football clubs such as Everton FC and Wolverhampton Wanderers and local water authorities such as Cheshire East, Severn Trent Water and Scottish Water.
Serious offers a breadth of services including engineering, installation and project management. The MBO enables Serious to partner with Able Services PDM to offer its clients a one-stop shop for all sewage, grease, drainage and waste-water management services.
Jeremy Proctor explains: "Having run the business for the last four years, the management team know what we need to do to grow. But, to implement our plans and invest in the business, we needed to take ownership. The unsecured lending deal with Caple has enabled us to complete the MBO, take control of the business and put our plans into practice."
Caple is believed to be the UK's first firm to offer access to long-term unsecured funding of up to £5m based on the future cash flows of the SME. It requires no collateral or personal guarantees as security. The funding also works alongside existing secured financing, meaning firms can have access to more funding than they would get from their bank alone. It also allows them to maintain their existing financial relationship.
Caple's technology platform supports a network of accountants and financial advisors to SMEs who identify suitable borrowers and prepare the loan application materials. This enables an efficient and robust credit process. Roy Farmer, partner at Dains Accountants advised Serious. This is the fourth deal Caple has completed with Dains.
Roy Farmer, partner at Dains Accountants, says: "As soon as we started to work with Serious it became obvious that the funding required was a natural fit with Caple's unsecured loan product. Caple's loan, complemented by an asset-based funding package, allowed us to fund the transaction and provide the headroom required for the company's growth plans."
The funding Caple facilitates is part of BNP Paribas Asset Management's SME Alternative Financing direct lending platform, which enables SMEs to access funding from institutional investors.
8th July 2021