Agreements help capital flow
RBS joins investors to lend to mid-sized firms
Royal Bank of Scotland has signed agreements with three big investment institutions to lend up to £100 million to mid-sized companies.
The bank has teamed up with AIG Asset Management (Europe), Hermes Investment Management and M&G Investments.
For the first time, these agreements will enable mid-market sized companies owned by private equity sponsors to borrow up to £100m in a single transaction that can be co-funded by all four lenders.
The agreements follow recent calls for support for mid-sized firms from industry leaders, including the new CBI director general Carolyn Fairbairn.
Each transaction is originated, led and co-ordinated by RBS alone, with each investment partner undertaking their own internal credit analysis.
These exclusive arrangements mark the entrance of AIG, Hermes and M&G, asset managers with pension fund or insurance clients, into the private equity-backed mid-sized corporate finance market.
RBS has already completed three transactions through these agreements, totalling around £250m, for three UK companies in the IT Software Services sector, the Laundry Services sector and the Fast Casual Restaurant sector.
Under the terms of the agreements, AIG, Hermes, M&G and RBS will co-invest up to £100m in a single transaction, with RBS typically providing around £15 – 30m of its own capital.
This collaborative approach provides unprecedented access to funding for RBS’s sponsor-owned mid-market business customers. RBS’s investment partners, meanwhile, benefit from RBS’s 20-year track record of lending in this market and a team of 60 dedicated staff managing RBS’s network of sponsor-owned UK mid-market borrowers.
Richard Roach, head of financial sponsors at RBS, said: “RBS has been a consistent lender to private equity-backed UK mid-market corporates for more than 20 years and these new co-lending agreements will make a real and unique difference in this important market.
“It makes borrowing on this scale simpler for our customers and our ability to structure competitive lending packages in this way enables us to support our private equity clients and in turn continue to help UK companies expand, create more jobs and invest more in the British economy.
“We are pleased to be working with AIG, Hermes and M&G to provide exclusive access to significant long-term investment capability and our close collaboration will ensure each transaction is executed quickly and efficiently.”