Barclays Bank has joined forces with an alternative lender to offer loans of up to £120 million.
Barclays and BlueBay Asset Management’s Direct Lending Fund have announced that they are collaborating to offer joint bespoke lending solutions to medium-sized enterprises in the UK in specific deal situations.
It is the first collaboration between a bank and one of the many alternative operators that have sprouted and raised direct lending funds in Europe.
They are offering single “unitranche” loans to finance UK financial sponsor-backed mid-market companies.
This initiative will provide loans of up to £120 million alongside which Barclays can provide other banking services and will be complementary to Barclays’ and the Funds’ existing lending activities.
This collaboration is a significant development in the UK loan market and involves combining capital from Barclays and the Fund to achieve a single term loan, at a single rate of interest, with common terms and effectively one lender or counterparty.
The benefits of this solution are multi-fold: Barclays and the Fund will offer prospective borrowers a loan that can be deployed more quickly than a traditional deal involving several banks, the loan can be tailored to meet the specific requirements of a business, including committed acquisition or capex facilities to facilitate growth plans, together with the day-to-day banking services of a UK clearer.
Karl Nolson, Managing Director and Head of Debt Finance at Barclays, said: "We have taken a leading role alongside direct lenders for the past 18 months by providing complementary types of finance. Now however, by joining forces with BlueBay's Direct Lending Fund, we are bringing about a step-change in the UK mid-market lending space, providing real cost and speed benefits to borrowers. Lending to this segment of UK plc is at the core of what we do, and with "unitranche" financing we will be able to provide additional support towards economic growth."
Anthony Fobel, Partner and Head of Private Lending Strategies at BlueBay Asset Management, commented: "The BlueBay Direct Lending Fund has successfully provided much needed growth capital to UK-based mid-market businesses and has also worked closely with private equity firms to offer flexible acquisition facilities and solutions for their portfolio companies. By joining forces with Barclays, the Fund can now additionally offer financial sponsors and UK businesses a customised solution that combines the flexibility, speed and execution certainty of a private debt fund, with the well-established banking services of a leading UK clearer."
Barclays will be reimbursed first if the company becomes insolvent, BlueBay will fund the riskier part of the loan but get a bigger share of the profit.
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