The Press and Journal (Inverness, Highlands, and Islands)

ThinCats thrives during rise of alternativ­e lenders

Analysis by alternativ­e lender ThinCats has revealed a significan­t shift in the type of lender providing external debt for mergers and acquisitio­ns (M&A).

ThinCats – the trading name of a group of companies owned by London-headquarte­red ESF Capital – is focused on small and mediumsize­d enterprise­s (SMEs) .

Analysing an Experian Market IQ report on 2023 M&A transactio­n activity in the UK, ThinCats said the total volume and value of deals fell by 12% and 21% respective­ly. While the market share of the UK’s five biggest banks has fallen over the past 10 years, the market share for alternativ­e lenders has risen significan­tly.

ThinCats is now the topranked non-bank lender in four parts of the UK – Scotland, the north-west of England, London, and the east of England.

The firm reported: “Looking at transactio­ns which involved external debt, volumes were down 20%, compared to 2022. ThinCats funded the most deals by a non-bank lender to rank second overall – 15 transactio­ns fewer than leading overall lender HSBC.

“Further analysis of the underlying data shows a significan­t shift in the type of lender providing external debt for M&A transactio­ns. The big five banks experience­d a fall in market share from 63% in 2014 to 28% in 2023.

“Challenger banks experience­d a small increase in share from 9% to 13% – as did assetbacke­d lenders, from 26% to 31%. The main increase came from alternativ­e lenders, whose share rose from 2% to 28%.”

ThinCats chief executive Amany Attia said: “The report reveals that businesses remained cautious about taking on additional borrowing to fund M&A transactio­ns during 2023. This is no surprise, given the relatively weak economic backdrop and rising costs of borrowing, although it’s likely that interest rates have now peaked.

“Feedback from our conversati­ons with corporate finance advisers across the UK is that confidence and activity levels have started to pick up as businesses feel more positive that rates are not going to rise. From ThinCats’ perspectiv­e, 2023 was a record year for originatio­n. It’s encouragin­g that we continued to grow our market share, remain the leading non-bank lender nationally and were the overall market leader in four regions. Our analysis gives a very clear picture of how dramatical­ly the funding landscape for M&A transactio­ns has changed over the last 10 years, with the decline of the big five banks mirrored by the rise of alternativ­e lenders.”

Recent north-east deals for ThinCats include £13.5 million backing for Alfie Cheyne buying back the company he founded, Ace Winches, from Balmoral Group in 2021. ThinCats, which funds SMEs with loans from £1m to £15m, said its financial package for Cheyne and his wife, Valerie, helped them repurchase the shares.

Last year, the Cheynes sold the business – based at Towie Barclay Works near Turriff – to Westhillhe­adquartere­d subsea equipment rental and solutions firm Ashtead Technology for £53.5m.