Going regional

• Our Private Equity division has broadened its product offering to support sponsors and their portfolio businesses through the full business lifecycle.
• The team has also expanded its regional presence with new members in the North East and Thames Valley areas etc.
• Combining the speed and deliverability of a fund with the relationship focus of a bank, our team has worked with a wide range of blue-chip midmarket sponsors, providing funding on over 50 deals.

Shawbrook has expanded its regional presence in the UK, with new hires in the North and Thames Valley to support the bank’s existing financial sponsor coverage across the Midlands, Northwest and London.
What are the strategic drivers behind this regional expansion?

Jennifer Murray: Our private equity team has been growing steadily, and building a regional network is part of that growth plan.

Deepak has been based in Birmingham since inception and has grown our presence in the Midlands as well as covering the established Manchester market – and we have completed several transactions across the patch. This evolution is the next step to expand our local footprint further and strengthen our bandwidth across the Northeast, Northwest and Scottish markets.

Jack Longden will lead our coverage across the Thames Valley. Rhys Morgan will work alongside Deepak to cover the Manchester market but will also cover the Northeast, which historically has been less active but has come to life in recent years. There are around a dozen private equity firms that have opened up offices in the Northeast and there is a surge of activity in tech and renewables in the region, as well as a deepening pool of strong founder-led companies. It is a really exciting market where we see great potential. And being from Sunderland myself, I have long been keen to have a base in the region.

Growing our coverage team complements the other prong of our growth strategy, which is to broaden our offering with a wide range of products to support companies not just on a transactional basis but through the full business lifecycle.

We see the combination of a broad product offering and a regional network, with boots on the ground, as a valuable point of differentiation.

Why not just support the regions from a London hub, with directors travelling when required as deals emerge?

Deepak Parekh: If you compare the approach to corporate finance and dealmaking in London to our approach in the regions, you will find that the regions are much more relationship-led and less transactional.

The longevity of relationships and networks formed outside of the cut-and-thrust of transactions are fundamental to building a successful franchise in the regions.

The importance of local contacts can’t be overemphasised and there is a real sense of community spirit. I, for example, run a charity (The Diwali Foundation) outside of work and it has been quite amazing to see how people across the regional corporate finance community have supported that. We have had firms run fundraising activities to support the charity, which was also made the charity partner for the Rainmaker Dinner, an awards ceremony for the Midlands corporate finance community. This is just one example of the community spirit that underpins dealmaking across the regions.

We are convinced that having that local connection with sponsors and businesses is essential for building relationships in advance of deals coming to market. Investing in the community is important and helps to nurture deal origination, as opposed to a more transactional market where you wait for the books to land.

I’ve spent around 20 years of my career working in the regions and there is no doubt that relationships go beyond just deals. There’s a sense of friendship and mutual support, and I feel that is something you can only foster if you have teams outside of just London.

Murray: We have always covered the regions but as we grow, we are pushing the green button and demonstrating our commitment to regional markets by adding to our team, putting more boots on the ground and deepening our regional coverage even further.

Circling back to the point raised about the regional focus complementing the strategy on product development, could you explain how those two elements interlink and support it each other?

Parekh: It is all about focusing on the client. Financial sponsors will have offices and dedicated teams covering the regions and we want to mirror their strategies and be there to support them.

Broadening the product set and investing in regional coverage is also about putting the infrastructure in place to support the long-term growth of our private equity practice. Since we started the financial sponsor coverage team, we have been in build-up mode, funded some really strong credits and worked on 50 deals with a wide range of blue-chip midmarket sponsors. For us, this is the right time to keep investing in the team and make sure that we can continue on that growth trajectory.

Murray: The ability to provide a broad product offering with regional expertise is what differentiates our offering.

As mentioned, it is all about being client-centric. We are not a lender that can only support you in certain markets with a very narrow, rigid product set. Our teams support businesses across a broad range of sectors and we can be very flexible on structure.

We can fund a mature, buyout-backed business with a unitranche structure, but we can also work with sponsors that may want to dip down into something that is tech-led or pre-profit with venture debt or recurring revenue finance. For a less mature business, we can bring an asset-based lending (ABL) solution to the table.

We are in a position to do the right thing for the business at the right time. A business or sponsor might come to us with a structure in mind but that may not be the best option. We can draw in expertise from our private equity, ABL or healthcare teams to curate a structure that is best suited to each situation.

Shawbrook is now at the size where the corporate loan book is over £1bn of facilities, with the private equity book at around £500m. The sector and product knowledge we can provide is pretty substantial. We have all these resources at the client’s disposal, and we can draw on them to pull together a solution that we think is the best fit. For ambitious management teams, it is about being flexible and bespoke, rather than imposing a capital structure onto a company.

Parekh: A regional model with people on the ground means clients in the regions have direct access to all of this expertise through a relationship with a regional contact. We pride ourselves on being joined up.

It is also worth pointing out that, as a lender, you are much more likely to have the opportunity to play a leading role in a transaction when you have touchpoints with the advisers on the ground. Post-completion, it is often valuable for the client that the relationship is partly managed via a local and accessible point of contact too. We believe that gives us a true competitive advantage: combining the speed and deliverability of a fund with the touchpoints and relationship focus of a bank.

If we receive an approach from an adviser with a particular niche, or a sponsor that may be considering a variety of options, we can add some value to the deal process and suggest alternatives and options. Not many lenders can do that.

Murray: The question we constantly ask ourselves is: how can we add value for our customers? The product set, flexibility and regional coverage all play into that.

If we can contribute to local corporate finance communities and be integrated into them, we’ll see deals earlier, have more of an impact and add more value for our clients. Equally, on the product side, rather than just drawing up term sheets, we can take a more holistic view and add some value for advisers and sponsors when shaping deals.

Finally, we want to have the ability to work with credit for the long term and support it through every stage of its development. We can be there from the beginning, with a venture debt or recurring revenue finance facility, all the way through to when the business matures with a unitranche provision. You can follow a business as it develops when you have all the arrows in the quiver.