Endless to offer new lending lifeline for corporates

It has launched a new business, Encina, to target cash-starved mid-market businesses with turnover above £5m.

Garry Wilson, managing partner, said he hoped that Encina will be able to lend £25m in its first year.

The business will provide debt of £2m and more against balance sheet assets such as debtors, stock, property, plant and machinery.

It will also consider minority equity stakes.

The move is significant for seven-year-old Endless, of Leeds, which has built up a strong reputation for ‘turnaround’ investments in struggling companies.

Mr Wilson told the Yorkshire Post: “We knew there was a gap in the market.

“It’s the ongoing credit crunch. We’ve seen it first hand.”

Endless has appointed a new director, Andrew Ward, to lead Encina.

Mr Ward, an experienced financier, said: “We feel there are many situations where a company cannot access the level of funding it ideally requires from traditional banking sources, but is also not suitable for an equity investor such as Endless. This is the gap.”

He added Encina will consider lending across all sectors, but the asset-based requirement will favour traditional Yorkshire industries such as engineering, manufacturing and distribution.

Mr Wilson said: “I’m hoping Yorkshire will see a lot of the benefits of this in terms of injection of funds into the local economy.”

He said Encina will allow Endless to make more investments in the region.

Endless will back Encina with money from its existing funds, but expects it to become self-sufficient in the longer term.

Mr Wilson said Endless is “sitting on dry powder of £250m”, referring to funds raised from backers.

Endless adopted a cautious position in the second half of 2011 due to the ongoing crisis in Europe, but Mr Wilson said that the firm’s investment and disposal activity will increase during 2012.

Mr Wilson said Endless has been looking to diversify and had considered moving into asset-based lending since summer 2010.

He added: “The UK has experienced a significant reduction in liquidity in the banking markets in the past four years and there are no signs of this improving.

“I have seen many good opportunities for a debt provider over this time, which were not suitable unfortunately for an equity investor such as Endless, and it is frustrating to know these businesses weren’t being supported.

“In the same way that Endless was born out of there being a dearth of funding for turnarounds, Encina is being established to address another market space that is not being served.”

Mr Ward made his name at Five Arrows Commercial Finance, the asset-based lending division of NM Rothschild Banking Group.

He later worked for Credit Agricole before launching asset-based lender Reward Capital in 2010. He exited the business in Christmas 2011.

Mr Ward, 38, said: “This is a fantastic opportunity to develop a new and innovative flexible lending business.

“We have access to funds and can act quickly. This will be tremendous additional resource for UK companies that are looking to grow or restructure.”

He added: “There is a lot of potential. There has been a period of caution with the eurozone crisis, unemployment rising and high inflation.

“But I think there is a lot of good businesses in Yorkshire.”

Encina, a separate legal entity to Endless, aims to complete transactions throughout the UK and will be based in Leeds. Mr Ward is recruiting a team.

Endless manages more than £500m on behalf of investors in Yorkshire, the United States and Europe.