Bristol-based debt lender Frontier Development Capital raises further £30 million following record year

Fast-growing finance provider Frontier Development Capital (FDC) has raised a further £30 million from two of its existing investors after completing a record year for investment.

FDC, which is based in Birmingham with offices in Bristol and Manchester, supports smaller businesses and property developers nationwide with debt funding of £1 million to £20 million. It has been lending directly to businesses in the South West, East Midlands, West Midlands and North of England since 2016.

The additional funding comes from British Business Investments, which is a commercial subsidiary of the British Business Bank, and West Midlands Pension Fund. It will increase the size of its FDC Debt LP fund to £105 million and bring its total funds under management to £445 million.

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FDC approved over £141 million of investment for SMEs and property developers across the UK in the 12 months to the end of March 2023 – up 76 per cent on the previous financial year and almost four times the amount it invested four years ago.

Key deals during the year included a £2 million investment to back a management buy-out of Hertfordshire-based sales enablement consultancy Mentor Group; £1 million growth funding to support the acquisition of three compliance companies by Solihull-based health and safety firm Opus Safety; and a £9 million investment to enable Tamworth Cornerstone Housing Association to almost double the number of properties it owns to help families at risk of homelessness.

In December last year, FDC became part of Mercia Asset Management plc, one of the UK’s most active SME finance providers, in a deal that will allow it to benefit from synergies with Mercia’s lending teams and further growth opportunities.

Judith Hartley, CEO, British Business Investments, said: “Following our earlier commitment to FDC’s Debt Fund in 2020, we are pleased to be making an additional commitment of £10 million to the Fund. Our increased commitment allows FDC to support further lending to smaller businesses across the UK, and particularly in the regions.’’

Rachel Brothwood, executive director of pensions, West Midlands Pension Fund, said:
“We are excited by the opportunity to commit additional capital and be able to contribute to the strategy and FDC growing in strength.

"The additional capital will enable FDC to provide funding required to support and grow fundamentally sound small and medium-sized enterprises while providing attractive risk-adjusted returns in a manner that is well aligned to our overall strategy and responsible investment approach.

Read more: FDC provides £900,000 funding for MBI of Stourbridge electrical contractor

"The recent partnership with Mercia highlights the growth and future ambition of the business with benefits achieved through synergies and complementary skill sets.”

Sue Summers, chief executive of Frontier Development Capital (pictured), said: “We are grateful to our investors for this additional capital, which will enable us to extend our work in supporting the growth of SMEs.

"It comes after a landmark year in which we have approved a record amount of investment and joined forces with Mercia, which shares our passion for helping SMEs to thrive through the provision of flexible finance.

“Being part of Mercia will support our future fundraising efforts and help us identify even more potential lending opportunities. We look forward to further growth in the year ahead as we continue to establish FDC as a go-to provider of capital across the UK regions.”