Video – Private equity, finance and Invoice discounting

Mobeus Equity Partners is a leading equity investor in UK based SMEs. Here, partner Chris Price talks to Thinking Business about how their financial sector about fundraising through PE, invoice discounting and factoring.

1. How important are Private Equity firms like yours to the SME and Mid Market?

As a business we look to fund companies that can be less than £1 million of turnover with a great idea, looking to drive forward a very early stage business to create the next Google right through to backing a mature profitable business that needs to go through a change of control, a change of ownership.

2. How important is it to a growing business to have a supportive investor?

What do we bring to the transactions? We bring expertise in how to grow companies, the steps you need to go through to put structure, process in place. We bring money. We help provide the capital to give a balance sheet to enable businesses to grow and we provide support. Being an entrepreneur can be a very lonely place. We’ve seen it – we’ve been through two of our own buyouts as a business and we know some of the loneliness that that brings and we want to be there to be a trusted friend and an ally to management teams as they grow.

3. Where do you see the factoring/invoice discounting product going over the next 5 years?

Well, our products – invoice finance related products – are designed for growth. There’s obviously a lot of money around at the moment and it’s finding its way into different forms of lending – new lenders – and as we’ve seen already in a fairly short period of time not all of these lenders have succeeded and will succeed. We are in, I think, a good place – national coverage we’re aiming towards. We’ve got products that are tried and tested and we have individuals within the business who are experienced. We’re very much a service led business.

4. Where do you see the Private Equity offering going over the next 5 years?

Private equity has grown into a large part of the UK economy. Private equity owned businesses are around you whenever you walk down a High Street or whenever you go into a hospital – there are private equity companies providing products or services all around you in life. As an industry we are growing and more money is being raised. It is inherent on us to keep using that money in a positive way to help companies continue to grow and help employment.

5. What challenges and opportunities does that present to Mobeus and Factor 21?

We’re a growing business – that brings its challenges. In terms of the marketplace, I think the opportunities are very much possibly to make an acquisition at some point and to ride the wave of hopefully a growing market. Our overall market having not grown significantly in the last four or five years, I think it’s showing signs it is growing now.

I think any private equity investor would be lying if they said the buying wasn’t important. Having said that, any deal we do there must be a growth opportunity inherent within it. With Factor 21 we see an opportunity to do a number of things to help the team grow the size of their sales team, to expand their geographic presence both through organic growth but also acquisition if the opportunity presents itself but we are also helping them by freeing the reins and allowing them to focus purely on growing the business outside of the constraints of an owner managed business where preservation of capital and wealth is a key factor.

6. Do PE firms consider themselves as market consolidators through buy and build strategies?

As a business, we’ve just raised a new fund – we’ve just raised £166 million to invest into smaller UK companies and we’ll be deploying that money over the next five years. There are opportunities out there and there are exciting businesses looking for funding so we are actively looking for new opportunities and ways of deploying our capital to deliver good returns for our investors.