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SME finance.

UK economic growth relies on the success of small and medium sized businesses. Whether companies are looking to expand, launch new products, acquire another business or invest in new talent, growth can only come when there’s investment. Despite technology and digital representing the UK's fastest  growing sectors in recent years, UK start-ups, university spinouts and scale-ups have suffered acute equity funding gaps, disadvantaging them versus global peers, particularly those in the US.

We see an opportunity to use our patient capital to provide alternative debt and equity financing solutions to SMEs, whilst generating attractive and diversified risk adjusted returns to shareholders. Over the coming years we are seeking to enable over £10bn of funding into SMEs.

The European banks remain constrained as they recapitalise – many reverting to their ‘core’ markets. Legal & General Capital supports the development of Alternative Finance markets, with an investment focus on mid-market corporate debt, asset-backed lending, trade finance, property finance, infrastructure debt, leasing; venture capital and growth equity. Core factors include:

  • Traditional SME financing sources challenged
  • European SMEs have historically been over-reliant on bank funding
  • Banks retrenching and growing institutional investor appetite for direct financing of capital intensive asset classes
  • UK SME financing market worth £76bn and growing rapidly
  • Opportunity to institutionalise both equity and debt financing of SMEs as the UK's engine for growth and employment

Examples of SME Finance investment activities

Pemberton Asset Management   
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Pemberton Funds
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Cambridge Innovation Capital   
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VC strategy
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