Management buy out the loan book of troubled Davenham Group

Independent advisory firm Dow Schofield Watts, which has an office in Leeds, backed the management team from Davenham Group to buy out its loan book from its administrator. Davenham Group went into administration around 18 months ago.

Dow Schofield Watts said it has now raised debt facilities of more than £5m from a number high net worth individuals and the directors of Dow Schofield Watts to support the buyout via a new company called Davenham Portfolio Management (DPM). Well-known Yorkshire deal-maker Roger Esler, who heads up Dow Schofield Watts in the region, said he was pleased to announce Dow Schofield Watts’ close on its first debt fund to finance the buy-out.

“DPM provides the fund with strong security, generates good cash flow and is driven by an experienced management team. The fund is expected to provide a very attractive IRR [internal rate of return] to our investors and a return of capital and income within 18 months.

“Having completed the buyout, DPM management is now working with Dow Schofield Watts on a new fundraising to enable it to re-enter the SME lending market focused on the North of England.”

Davenham Group was lender to SMEs (small and medium-sized enterprises), based in the North West, but went into administration in autumn 2011.

It had a property book and a commercial lending book, but it got into difficulty during the recession, “principally around its property book”, said Mr Esler.

He added: “The administrators have been winding out the loan book and what we began last year was a dialogue with the management about doing a buyout of a group of those loans.”

He said: “Due to the current banking environment, the Davenham team was unable to secure the required debt facilities through traditional sources.”