Foresight provides £40 million debt funding line into asset-backed SME lender Reward Finance Group Limited
Funds managed by Foresight Group LLP ("Foresight”) have provided a £40 million secured loan note facility for Reward Finance Group Limited ("Reward” or the "Company”).
Leeds headquartered Reward is an independent lender which provides secured loans to UK-based SMEs seeking more flexible finance, more promptly than mainstream lenders can deliver. Reward’s bespoke funding solutions take multiple assets as security, enabling the Company to provide short to medium term loans or invoice discounting facilities to support companies in a variety of different situations.
Founded in 2011 by the joint managing directors Tom Flannery and David Jones, Reward has delivered year on year growth in its loan book and pre-tax profit. In the year ending February 2017, the Company advanced funds totaling £84 million and the year-end loan book stood at £40 million, up 25% on the previous year. Corresponding income grew to £7.56m and pre-tax profit was £3.5m. The Company continued to maintain its low bad debt rates, with write-offs representing only 0.03% of total funds advanced, testament to the Company’s robust underwriting procedures and its highly experienced risk management team.
Reward is 70% owned by Dr Christo Wiese’s Johannesburg Stock Exchange listed Tradehold Limited (“Tradehold”) with Reward’s management team owning the remainder. To date, the Company has been solely funded by Tradehold and its associates and affiliates. Upon establishment of the Foresight loan note facility in August 2017, Reward drew down £20 million to enable a partial refinance of the Tradehold funding, as well as to provide capital to fuel the growth of the Company’s loan book. The remaining £20 million remains available for the Company to draw on a flexible basis to support its ongoing growth.
As a result of a restructuring that occurred in conjunction with the loan note facility, Tradehold’s financial assets, including its shareholding in Reward, are being unbundled into a separate entity called VestIN which is listed on the Bermudan Stock Exchange and South Africa’s JSE AltX Stock Exchange. Completion of the share transaction is expected November 2017. VestIN, alongside Foresight, will continue to provide funding to Reward.
Amy Crofton, Investment Manager at Foresight, 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, Partner at Foresight, 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, commented: “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 5 years, within our new financial services vehicle”.
Tom Flannery, Reward’s Joint Managing Director, commented: “This is a significant step forward in the short history of Reward Finance Group Ltd. Whilst 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.”