FDC unveils £81.5 million Evolution Fund

A Midlands-based finance provider is set to boost the growth and sustainability ambitions of small businesses across the Midlands and North of England with the launch of a new multi-million-pound fund.

Frontier Development Capital (FDC), part of Mercia Asset Management, has unveiled its £81.5 million Evolution Fund to support regional SMEs with flexible debt packages ranging from £1 million to £8 million. 

The fund is backed by £80 million of commitments from the West Midlands Pension Fund and the British Business Bank, each contributing £40 million.

Bosses say the new eight-year fund, managed from FDC’s Birmingham headquarters and offices nationwide, will offer funding for management buyouts, acquisitions, refinancing and sustainability improvements, providing access to funding for smaller firms that are “often underserved by traditional lenders” and helping them “grow and fulfil their potential”. 

They add it will build on FDC’s track record of investing over £200 million in SMEs since 2016.

Graham Mold, head of growth capital at FDC, said: “Despite the variety of debt providers in the market, it is still difficult for smaller firms to secure capital as many funders are unwilling to lend sums of under £10 million or to support transactions involving SMEs.

“The Evolution Fund reinforces FDC’s commitment to regional businesses often underserved by traditional lenders. 

“As no two deals are the same, it is also designed to meet the need for tailored SME funding. 

“Our team’s ability to assess risk, structure investments and support resilient businesses makes FDC a valued funding partner.”

Shiventa Sivanesan, assistant director – investment management and stewardship at the West Midlands Pension Fund, added: “We’re excited to build on our existing partnership with FDC and British Business Bank as part of our long-term commitment to support regional SMEs. 

“Our investment is expected to deliver competitive returns aligned with our responsible investment values, allowing us to serve the interests of our members. 

“Businesses are operating in an uncertain and challenging environment and by improving their access to funding we can enable them to grow and fulfil their potential. 

“We hope other investors will follow our lead and help to scale up the support SMEs need to grow and thrive.”

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