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YFM completes £365m of deals and raises £110m of new funds

20 December 2019

YFM completes £365m of deals and raises £110m of new funds

UK’s smaller businesses continue to invest for growth

So, 2019 was going to be a year when we all paused for breath. Fortunately, UK’s small businesses have thought differently and that has seen YFM Equity Partners (YFM) complete £365m of deals and raise £110m of new funds.

This result represents a sharp increase on 2018 and reflects the resilience and positivity of smaller businesses and demonstrate that this sector is bucking some of the perceived business trends.

Behind these figures are:

  • 9 new investments
  • 3 realisations
  • 5 follow-on investments
  • 2 fundraisings

Activity was evenly spread throughout the year with the second half being equally as strong as the first. Against a backcloth of uncertainty and a snap election the resilience, creativity and imagination of UK’s small businesses has been matched only by the appetite from investors to support funds investing in these businesses.

A year ago there was a general belief that we’d have some form of agreement on how the UK was going to extricate itself from the EU, with all eyes on 29 March 2019, but scepticism over what the shape of that might be meant the period of uncertainty lasted longer than expected.

This year we have all eyes on 31 January 2020, if the last year has taught us anything it’s to expect the unexpected. We enter 2020 with as strong a pipeline of investment and divestment opportunities as we saw a year ago. We anticipate investing from the funds we have raised this year from the first quarter of next. There’s little to suggest that activity rates will slow down in this sector.

David Hall, Managing Director at YFM said; “Overall returns, both realised and unrealised, were steady in the first half of the year, strengthening into the second half. There’s been a healthy appetite for YFM’s assets from both trade, overseas and UK investors, as well as from UK private equity houses. This has translated into positive returns and more importantly distributions to investors who are largely individuals, rather than institutions”.

“Against a background of low interest rates and returns, this strong performance has whetted investor appetite which remains strong and it is clear they remain committed to invest in this sector of the market.”

“Whilst these businesses may be small they tend to have an international outlook and customer base. Their delivery systems lend themselves to being able to scale rapidly and respond to market changes irrespective of geographical boundaries.”

“However, there are some businesses which have more technical and complex products where they are mission-critical, protecting data being a prime example.  These have longer sales cycles and arguably more contractual longevity with their customers, but perhaps can’t scale as rapidly needing bigger sales forces to meet the customer’s buying needs.

“This activity continues to see us invest in our team, we added three investors this year and are looking to add four or five in 2020”.

YFM invests in UK-based smaller businesses, none of which are listed, and their investments cover the length and breadth of the UK through its network of regional offices as well as its hub in London.

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