Reward Finance doubles SME lending capability with £40m investment

Reward Finance Group, the Leeds-headquartered alternative funder, has received a £40m investment from Foresight Group.

As a result, the group will double the amount of funds available it can lend to SMEs.

Foresight Group, a global independent infrastructure and private equity investment manager with £2.7bn of assets under management, has provided Reward Finance with a secured loan note facility against the investment.

Founded by joint managing directors Tom Flannery and David Jones, Reward Finance was identified as an attractive investment vehicle for Foresight as it has delivered year-on-year growth in its loan book and pre-tax profit.

In the year ending February 2017, Reward advanced funds totalling £84m and the year-end loan book stood at £40m, up 25% on the previous year. Corresponding income grew £7.56m and pre-tax profit was £3.5m.

Reward Finance is 70% owned by Dr Christo Wiese’s Johannesburg Stock Exchange-listed Tradehold Limited, with Reward’s management team owning the remainder.

Tom Flannery, Reward’s joint managing director, said: “This is a significant step forward in the short history of Reward Finance Group Ltd.

“While we have been growing the business with substantial loan facilities provided by our ultimate parent since our inception in 2011, we have been looking for a senior debt funding facility to take the business on to the next level.

“Amy Crofton and the Foresight team have an in-depth understanding of the UK alternative funding market, and really grasped that no one deal is the same as the next, when lending to SMEs. Foresight therefore tailor-made the loan note facility to make it a truly bespoke funding solution and well suited to our business needs.”

Amy Crofton, Foresight investment manager, commented:“Reward Finance Group has an exceptionally strong track record of profitable growth. We have known the business for some time and have been impressed by its development over the last few years.

“Working with the Reward team, we structured a flexible debt facility that will provide substantial new capital resources to promote the ongoing success of the Company”.

James Livingston, Foresight partner, added: “We’re delighted to back Tom, Dave and the broader Reward team. They are successfully addressing a significant gap in the market and continue to expand their offering both in terms of national reach, with the opening of additional offices, and debt offerings.

“This investment represents a healthy diversification for our growing portfolio which we are seeking to continue.”’

Dr. Christo Wiese, executive chairman Tradehold SA, said: “I have been excited about the potential of Reward since I met Tom and David in 2011. With Tradehold’s financial support they have built an innovative niche business and, with the Foresight deal, we now have the ability to grow this business even more strongly over the next five years, within our new financial services vehicle”.

LGB Corporate Finance, a mid-market corporate finance firm, advised Reward Finance Group Limited on the financing transaction.

LGB had been working with Reward Finance and its majority owner, Tradehold Limited, since early 2017 providing advice on the structure and terms of a debt package to meet the company’s objectives.

Angus Grierson, director of LGB Corporate Finance, concluded: “Since establishment in 2011, Reward Finance has provided invaluable alternative debt capital to UK SMEs, and has helped a number of businesses facing difficult conditions in the conventional credit markets.

“This new debt funding package will enhance Reward’s ability to support UK growth businesses and help boost their performance.

“In Foresight Group we identified and engaged successfully with an alternative wholesale funding provider with the resources to contribute to the continued growth of Reward Finance.”