Key Takeaways
- • The British Business Bank has committed £40m to the first close of Harwood Private Capital UK Fund II, a fund targeting approximately £120m in total committed capital including co-investment vehicles.
- • The commitment brings the British Business Bank's total exposure to Harwood Private Capital to £75m across two funds, following an initial £35m in 2020 for the inaugural HPC UK SME Fund.
- • The fund targets UK lower mid-market businesses with EBITDA between £2m and £10m, offering flexible growth capital and debt for expansion, acquisitions and shareholder transitions.
- • The move signals continued government-backed support for private credit as a permanent part of the UK SME financing toolkit, according to the article's analysis.
Summary
The British Business Bank, the UK's government-owned economic development bank established under the Department for Business and Trade, has committed £40m to the first close of Harwood Private Capital UK Fund II. According to the article, including co-investment vehicles the fund's total committed capital stands at approximately £120m. The British Business Bank operates through a wholesale model, providing funds to private sector partners rather than lending directly to businesses.
The fund is designed to provide flexible growth capital to smaller businesses across the United Kingdom, focusing on the lower mid-market. Harwood Private Capital, a specialist private credit investment manager, positions itself as a provider for founder-led and family-owned businesses that want growth or restructuring capital without giving up operational or ownership control. The article describes Harwood as sitting between traditional senior bank debt and high-cost private equity.
The inaugural HPC UK SME Fund received £35m from the British Business Bank in 2020 and has since deployed capital into digital technology, clean energy supply chains, manufacturing and tourism. One cited example is Western Marinas, a Welsh operator that used Harwood funding to restore facilities in Wales and South West England. The new fund will continue this approach, offering debt for expansion, acquisitions and shareholder transitions.
Adam Kelly, Managing Director, Debt & Regional Funds at the British Business Bank, said many smaller businesses still struggle to access flexible growth capital, and that the commitment would help increase growth capital availability and support job creation. Haseeb Aziz, Managing Partner at Harwood Private Capital, said the bank has backed the firm since its first fund and that many founder and family-owned businesses remain underserved by traditional lenders.
The article frames the move as addressing the 'missing middle' in UK business finance, where firms are too large for micro-loans but too small or reluctant to take equity for major private equity houses. It notes the open question of whether such specialist funds can reach enough scale to affect national productivity.
The fund is designed to provide flexible growth capital to smaller businesses across the United Kingdom, focusing on the lower mid-market. Harwood Private Capital, a specialist private credit investment manager, positions itself as a provider for founder-led and family-owned businesses that want growth or restructuring capital without giving up operational or ownership control. The article describes Harwood as sitting between traditional senior bank debt and high-cost private equity.
The inaugural HPC UK SME Fund received £35m from the British Business Bank in 2020 and has since deployed capital into digital technology, clean energy supply chains, manufacturing and tourism. One cited example is Western Marinas, a Welsh operator that used Harwood funding to restore facilities in Wales and South West England. The new fund will continue this approach, offering debt for expansion, acquisitions and shareholder transitions.
Adam Kelly, Managing Director, Debt & Regional Funds at the British Business Bank, said many smaller businesses still struggle to access flexible growth capital, and that the commitment would help increase growth capital availability and support job creation. Haseeb Aziz, Managing Partner at Harwood Private Capital, said the bank has backed the firm since its first fund and that many founder and family-owned businesses remain underserved by traditional lenders.
The article frames the move as addressing the 'missing middle' in UK business finance, where firms are too large for micro-loans but too small or reluctant to take equity for major private equity houses. It notes the open question of whether such specialist funds can reach enough scale to affect national productivity.
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