Recovery & Growth Fund

The Recovery and Growth Fund

The Recovery and Growth Fund (the “RGF”) will seek to support well-established, historically profitable small to medium-sized businesses whose trading has been adversely impacted by the effects of a material macroeconomic event. We believe that a business which demonstrated strong fundamentals prior to such an event is likely to remain fundamentally sound in its aftermath. Accordingly, what is required is flexible and patient capital that provides management with the time and financial headroom necessary to navigate the challenges arising from the event. The RGF will attempt to provide businesses with a degree of certainty, as it relates to capital structure and funding, in the midst of an uncertain trading environment.

Financing Capabilities

The RGF will utilise debt and hybrid capital instruments, such as convertible loan notes and preferred equity, to provide Irish SMEs with the capital necessary to address financing and solvency challenges arising from a material macroeconomic event.

The RGF will focus on the provision of capital solutions that are either standalone in nature or which can co-exist with existing debt or equity capital providers when appropriate. In adopting this flexible approach, the RGF will aim to facilitate the retention of existing banking relationships and help to avoid material shareholder dilution. Additionally, the RGF will leverage its broad range of capital solutions to provide Irish SMEs with access to growth capital that may not otherwise be available from traditional sources due to the impact of the macroeconomic event on recent financial performance.

The range of RGF financing capabilities stretch across the capital structure, and include:

• Unitranche financing / Senior and stretch senior loans where no existing lending relationship exists or an existing lender is being refinanced;
• Subordinated / junior capital (2nd lien / Mezz);
• Holdco capital (cash-pay or PIK):
• Convertible loan notes;
• Structured or preferred equity financing

A primary feature of all RGF products will be reduced short- and medium-term servicing or repayment obligations. We consider this a critical element, particularly in light of the build-up of current liabilities that many businesses may have incurred as a result of a material macroeconomic event, RGF capital will facilitate balance sheet repair without imposing additional onerous short- or medium-term obligations on the free cash flow of investee companies

Investment Criteria

• Trading and financial condition that has been negatively impacted by the effects of the material macroeconomic event.
• Have fewer than 250 employees and / or less than €50m of turnover
• EBITDA of greater than €1.0m pre  material macroeconomic event
• Positive cash flow generation pre material macroeconomic event
• Industry and sector agnostic
• Capital requirement between €1m – €10m (on occasion larger investments can be facilitated)
• Short or long term capital as required by a business given its particular circumstances and requirements