Our funding for mid-sized businesses is sourced from a mix of institutional funding partners, such as asset managers and pension schemes, and senior bank lines combined with capital from our own balance sheet.
Although institutional investors have been able to access private debt markets through direct lending funds for some time, these funds generally lend to large corporates with minimum loan sizes of £20m. Lending to smaller businesses has also been possible through online platforms where high volumes of loans, typically less than £100k in value, are processed by automated credit models.
In contrast, the mid-sized SME private debt sector on which we focus has been largely inaccessible to institutional investors despite the attractive risk adjusted returns that are available. One of ThinCats’ strategic objectives is to open up this asset class to many more institutional investors.
Attractive risk adjusted returns
By definition mid-sized businesses are well-established, however, traditional lenders have failed to distinguish between the stronger credit scores of mid-sized SMEs compared to smaller businesses. This is why ThinCats built its proprietary credit risk model specifically for mid-sized SMEs.
Using our proprietary credit model, PRISM, we are able to price for risk and generate strong absolute risk adjusted returns which are in excess of those typically available from micro SMEs and larger corporates.
A complete investment solution
ThinCats operates a multi-functional team covering the whole loan life cycle, encompassing:
Credit analytics (PRISM)
Combining strong origination with robust underwriting and market leading data analytics
Having built strong relationships with the UK’s network of professional corporate finance advisers, we are recognised as the “go-to” non-bank lender for mid-sized SMEs in the UK. Our market leading proprietary credit model (PRISM) is used to automatically price loans and can also be applied as a monitoring tool. The model is based on an extensive database of around two billion datapoints that cover all UK mid-sized SMEs over the last twelve years.
We combine this with a five-stage credit process, underpinned by a consistent underwriting policy. Post-drawdown portfolios are supported by a team of highly experienced loan management professionals who closely monitor borrower performance, to support future growth, manage through any difficulties and ensure early default detection.
Our funding partners have included:
BAE Systems Pension Scheme - Responsible for more than £13 billion of investments on behalf of more than 100,000 members
Insight Investments - Global asset manager responsible for more than £700 billion of investments on behalf of pension funds, corporates, other institutional and individual clients
British Business Investments - Commercial subsidiary of the British Business Bank, it provides capital to support the growth of businesses across the UK
ESO Capital - A specialist credit manager who also holds equity in ThinCats
Waterfall Asset Management - A New York headquartered institutional asset manager focused on structured credit and private equity investments
Our funding partners have so far provided more than £500m in capital to UK mid-sized SMEs via ThinCats. As we continue to expand, we will be looking to deploy larger amounts of capital from a wider panel of funding partners.
If you are an institutional investor or a bank looking to deploy capital through a ThinCats lending programme, please contact our Investor Relations team for more information.
+44(0)20 3866 4700
ThinCats – Newlands House, 40 Berners St, London W1T 3NA