Who and what did we fund in 2023
Macro-economic factors, including inflationary and interest rate pressures, continued to challenge UK businesses throughout 2023, however, these did not stop us capturing market share and providing a record £395m of funding to mid-sized businesses.
In a subdued market characterised by increasing uncertainty and lengthened transaction times, bucking the trend to grow our origination by more than 30% over the year is a significant achievement. It is testament to the hard work of the ThinCats team, the strong relationships we have established within the business finance community and the flexibility of our offering.
Who we funded
Our focus on cashflow lending to support high growth, mid-sized SMEs continued to gain traction with corporate finance advisers resulting in more than 80% of transactions completed this year being cashflow deals. The most significant area of growth was seen within our sponsor lending franchise, supporting lower mid-market private equity backed businesses with over £200m in funding throughout the year. This included our largest ever deal of £25m and partnerships with 6 new sponsors.
Our healthcare team continues to perform lending over £70m in 2023. Demand from mid-sized residential and domiciliary operators is increasing, so we recruited healthcare funding specialist Satyen Shingadia to support Richard Henshaw our National Development Director for Healthcare.
Whilst almost 25% of funding was in support of owner managed businesses, we see this as a key area for significant growth in 2024 as we make further investments to support the funding needs of entrepreneurs that are vital to the UK’s economy.
Likewise, we see strong growth potential in our Transitional Capital proposition where origination is led by Stuart Thompson. Since launch in 2022, we have provided almost £100 million in Transcap funding.
Sectors that saw particularly strong demand outside of healthcare, were B2B businesses in the professional and IT services sectors that have been able to maintain margins and are better insulated from the squeeze on discretionary consumer spending.
However, we have also provided significant follow-on funding to businesses in perceived higher risk sectors such as leisure, supporting high profile brands like Pho and buy-and-build with their expansion plans.
Top 3 sectors: 1. Healthcare – 19% 2. Professional services – 18% 3. Technology – 11%
What our funding was used for
In terms of how businesses used the funding that we provided during the year, we continue to be a market leader in funding M&A transactions with 46% of the total funding used to finance acquisitions.
Whilst cashflow backed lending to fund M&A activity is an area of particular expertise for ThinCats, we also saw a significant proportion of capital deployed for growth (16%) and to refinance away from incumbent lenders (14%). Whether we are funding buy-and-build strategies or organic expansion, the common theme is that the businesses we lend to have been better able to react to opportunities that have emerged.
