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Private Debt

Connection Capital provides private debt to UK based SMEs where traditional debt sources are either not appropriate or are not available.

We target net returns to investors of 1.7x money invested, with annual yields between 9%-15%. Returns are generated through a combination of paid yield, rolled up yield and upside participation through warrants. 

Click here to view our current and past portfolio companies.

Investment Criteria

  • UK companies requiring £3m - £10m of private debt funding across a diverse range of sectors

  • We invest in businesses and opportunities that are capable of servicing our facilities from their projected cash flows

  • We do not invest in early stage or start-up companies.

  • We aim to deliver investment returns with a combination of paid and rolled yield and preferably with some element of upside participation. Target returns are deal dependent, commensurate with the idiosyncratic risk of each opportunity.

Transaction Types

  • Equity Release: we are able to provide cash flow positive businesses with investor debt to facilitate cash-out for non-operational stakeholders. In the case of Selection Services, we purchased existing Loan Notes and Equity from an existing Director and former Chairman of the business.

  • Replacement Capital: we can provide replacement debt facilities with far greater flexibility than traditional funds where appropriate. For example, we provided a secured debt package to EPI Group, replacing an existing senior debt package, alongside new CID facilities. This refinancing enabled EPI to make an in-fill acquisition and placed the business on a strong footing to take advantage of a number of commercial opportunities.

  • Supplemental Acquisition Capital: where an equity investment is not appropriate (whatever the reason) we may still be able to consider providing acquisition capital for buy-outs to supplement or complete a debt package.

Investment Structures

Our private debt investments take the form of debt instruments with a combination of paid and rolled interest, along with warrants or other mechanisms to secure value upon redemption. There is no ‘one size fits all’ and we work with targets to determine the best overall package depending on the individual circumstances of each transaction. As with our private equity offering, the fact that we are not a fund means that we can be far more flexible than most other traditional sources of capital in ensuring the appropriate structure is used in each case.

Clients can invest in units of £25,000