Davenham bosses are upbeat after buyout!

A new debt fund established by Dow Schofield Watts has supported the management buyout of Manchester lending company Davenham Group’s residual loan book.

 James Dow

The PHD Equity Partners Debt SPV No 1 fund has raised more than £5m from wealthy individuals and directors of Dow Schofield Watts, a business advisory firm based at Daresbury, near Warrington.

The proceeds have been used to back a buyout via a new company called Davenham Portfolio Management, whose bosses are now working with Dow Schofield Watts on a new fund-raising so they can lend again to small and medium-sized firms, focusing on the north.

Dow Schofield Watts said DPM has an experienced management team and provides the fund with strong security and cash flow, and is expected to provide a return to investors within 18 months.

Dow Schofield Watts, which offers corporate finance, management and financial due diligence, business broking and forensic services, already has its own private equity arm, PHD Equity Partners, and the debt fund is the latest addition to its offer.

Co-founder James Dow said: “The debt fund further demonstrates our abilities to innovate and create value for clients and moves us closer to being recognised as an independent merchant bank.

“The commitments received and the interest from new high net worth investors is testament to the track record we have built within our private equity portfolio and our highly-regarded corporate finance advisory business.

“Due to the current banking environment, the Davenham team were unable to secure the required debt facilities through traditional sources. We always recognise opportunity – this is a good management team, coupled with a cash generative, strong asset-backed business and we structured a high-yielding debt instrument which allowed the management team to retain all the equity.”

Davenham, which is based on Deansgate, is led by managing director Paul Burke. The business announced in 2010 it would cease new lending and would run off its book of property, asset-based and trade finance.

It then went into administration in October 2011. Davenham Portfolio Management has acquired the residual loan book only.

Mr Burke said he hopes to grow his team of seven and now resume asset-based lending to SMEs.