British Business Bank agrees £350m ENABLE Guarantee deal with Allica Bank
The structure frees up more regulatory capital than previous versions, allowing Allica Bank to support a larger portfolio of asset finance for established UK businesses.
The British Business Bank has agreed an ENABLE Guarantee transaction of up to £350m with Allica Bank.
The structure frees up more regulatory capital than previous versions, allowing Allica Bank to support a larger portfolio of asset finance for established UK businesses.
Allica Bank is expected to lend up to £700m to help smaller businesses buy equipment, vehicles and machinery.
The ENABLE Guarantee programme is aimed at increasing lending to smaller businesses by offering a government-backed guarantee to participating lenders.
Under the deal, British Business Bank will guarantee the senior position, while Allica will hold a share of the credit risk on each agreement.
The programme is open to UK banks, asset finance providers and lenders who lend to small and medium-sized businesses.
Secretary of State for Business and Trade Peter Kyle, said: “To grow our economy, firms need the financial firepower to turn their bright ideas into thriving businesses – especially smaller companies looking to expand.
“That’s why this transaction with Allica Bank is so exciting – meeting the huge ambition of the UK’s entrepreneurs by unlocking hundreds of millions in lending.”
Michael Strevens, managing director, structured financial institutions solutions at the British Business Bank, said: “We’re delighted to complete this ENABLE Guarantee transaction with Allica. This transaction provides an innovative new structure aimed at boosting the impact of the programme and demonstrating the value of public–private collaboration in supporting SME finance.
“We hope this transaction can unlock more risk-sharing opportunities for challenger and specialist banks’ lending to UK smaller businesses and act as a template for future transactions.
“This transaction will also help unlock the potential of smaller businesses and stimulate vital growth in Nations and regions throughout the UK.”
Richard Davies, CEO at Allica Bank, said: “This innovative ENABLE Guarantee transaction is an important milestone for Allica, potentially enabling us to lend up to £700m of additional funding to established UK businesses to support their growth.
“These businesses are Britain’s real economy, and this investment will mean new jobs and boosted economic activity in our communities up and down the country.
“We’re grateful to the British Business Bank and Sona for their support in unlocking this investment.”
John Aylward, founder and chief investment officer at Sona Asset Management, said: “We are delighted to partner with the British Business Bank and Allica on this pioneering ENABLE Guarantee transaction.
“Sona’s participation demonstrates confidence in Allica’s underwriting discipline, and reflects our conviction in the transaction as an attractive risk-adjusted investment opportunity.
“We see it as a differentiated opportunity to deploy capital into a high-quality, specialist lending platform.”
Aylward added: “In addition, our investment reflects the clear alignment of interests within the structure and enables a significant expansion of lending to established UK businesses.
“If successfully replicated, this model has the potential to create a scalable channel for institutional capital to support the UK real economy over the long term.”
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