Noble Fund Management has raised £45m for its first venture finance fund, Noble Venture Finance I (NVF). The fund will provide asset-backed finance to growth companies in the EU following the investment in these companies by venture capital firms.
Venture Finance typically comprises leases, loans or hire purchase facilities to provide working and/or fixed capital for assets such as manufacturing equipment, computers, telecommunication systems, laboratory test and measurement and other equipment. NVF will own the assets of the company until the financing is amortised, usually over 36 months and then will offer the assets back to the company at a pre-determined price.
Venture Finance already plays a major part in the venture capital cycle in the US with around 80% of venture deals having considered this type of financing. In Europe, it is still a fledgling market.
The team at Nobles has a strong track record in private equity and venture finance. The CEO and head of Venture Finance at Noble is Mark Taylor who has twenty years experience in the asset finance sector and was a founder of Europe’s first venture finance fund for Dresdner Kleinwort Wasserstein in 1998. Sandra Hope has spent twenty years in the financial sector having joined Kleinwort Benson in 1982. She has spent twelve years in asset financing working on a wide range of leasing transactions as advisor and lessor principal.
NVF will target growth companies that have recently received venture capital funding and will underwrite and syndicate financings in both euros and sterling in the major markets of the EU. The portfolio will be well-diversified as to VC relationships, sector, geography and maturities.
Returns will be made up of transaction fees, monthly payments, residual values in the assets at the end of the loan life and an equity kicker. NVF will seek warrants or share options in each investee company expected to be at a coverage value of 20%-25% of the committed amount of the finance facilities. These warrants or share options are usually exercised in the event of a trade sale or an IPO of the company.
Noble Fund Managers chairman Henry Chaplin, said: “Venture Finance is a logical next step for Noble Fund Managers. It builds on our strategy that concentrates on alternative investment classes that deliver income generation with an equity upside. We believe that the time for venture finance has arrived, particularly in the expanding high technology and life science fields and we are delighted to have raised our first European fund in this area.”