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 the global pandemic. Our belief is that a good business pre pandemic, has a strong likelihood of being a good business post pandemic and accordingly what is required is flexible and patient capital that will afford the business and its management the time and financial breathing space to trade through any pandemic related challenges. 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.
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 pandemic related financing and solvency issues.
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. The RGF will also utilise its broad range of capital solutions to provide Irish SMEs with growth capital that would not otherwise be accessible from more traditional sources as a consequence of the impact of the pandemic 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 believe this to be an important feature as, given the build-up of current liabilities during Covid-19, RGF capital will facilitate balance sheet repair without imposing additional onerous short- or medium-term obligations on the free cash flow of investee companies
- Trading and financial condition that has been negatively impacted by the effects of the pandemic
- Have fewer than 250 employees and / or less than €50m of turnover
- EBITDA of greater than €1.0m pre pandemic
- Positive cash flow generation pre pandemic
- 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