Meet the Team: Andrew Webster

Andrew Webster, Investment Director at Beringea

The ProVen Estate Planning Service is designed to help investors mitigate inheritance tax (IHT) while receiving a regular return on their investments at a time of rising inflation.

ProVen, which manages more than £300m on behalf of more than 10,000 retail investors, is managed by Beringea – a long-standing international venture capital investment firm with a focus on UK SMEs.

Here Andrew Webster, investment director at Beringea, shares his insights into the growth of SME lending, how the sector is developing, and his focus within the ProVen Estate Planning Service.

Q: Tell us about your background and experience before joining Beringea?

I’ve worked in the financial services and lending space for more than 30 years, starting my career as a corporate banker with Kleinwort Benson (now part of Commerzbank) before holding senior positions at ING and Noble Venture Finance. I then co-founded Boost&Co, a private debt lender to UK SMEs.

Having extensive experience in the lending industry, I now source and analyse opportunities to provide debt-based finance to fast-growing companies for Beringea’s ProVen Estate Planning Service.

Q: You have a longstanding track record in financial services and lending. How do you work alongside Mark Taylor, Beringea’s head of growth finance?

I’ve worked alongside Mark for many years, and we’ve built up an excellent working relationship. We focus on offering secured debt facilities to companies with strong growth potential through the ProVen Estate Planning Service.

Mark and I have a similar approach to risk and reward; this is particularly important given the profile of investors in the ProVen Estate Planning Service platform. We look to build solid long-term relationships both with companies looking to borrow, and the people that advise these businesses on their financing options.

We have extensive contacts in various sectors and are also able to benefit from Beringea’s successful track record in the venture capital trust space.

Q: Why would a company choose debt-based finance over equity finance?

There are many reasons why businesses raise money. These may include wanting to fund growth opportunities, invest in new equipment or staff, or boost their marketing spend.

The main advantage of debt financing is that company shareholders do not have to give up ownership over part of their business. Lenders are creditors to the company. Once the loan is fully repaid, with interest, the relationship ends.

In contrast, the main advantage of equity financing is that the money doesn’t have to be repaid, unlike a loan.

At ProVen, we can provide both equity investment and debt finance to businesses based upon their needs and profile.

Typically, a company that is generating reliable cashflows and is looking to expand may be interested in borrowing to fund its growth. This is where our debt finance proposition, which we offer through the ProVen Estate Planning Service (PEPS), may provide a suitable option.

Q: What are the risks of lending to smaller companies, and how do you manage these as a lender?

At ProVen, we keep things simple by only lending to UK companies that generate regular cashflows and have assets that can be used as security for the loans.

For example, we have loaned money to:

  • A business that rents gas tanks to a wide range of customers
  • A renewable energy business whose income is backed by government tariffs

Though nothing can be guaranteed, lending to companies like these mean loan repayments are likely to be reliable, providing the security of regular income for the lender.

Because we are focused on the UK, we are also not exposed to the volatility of foreign currency that can have a major impact on investor returns.

Q: Across your 30 years of investing, what have you learned about supporting SMEs through growth finance?

SMEs are the engine of the UK economy. According to government statistics there are 5.7 million SMEs registered in the UK. These employ 16 million people and generate £1.9 trillion of revenues.

It’s a big market but most of these do not meet our lending criteria. We focus on a subset of SMEs that offer growth potential and can demonstrate solid underlying cashflows.

Like any successful relationship, it is important to get to know who you are dealing with – it is vital to meet the management team and understand what makes the business tick.

It is also important to keep in regular contact with the business during the life of the loan to be able to anticipate any bumps along the way.

By building relationships and working together with borrowers, we are often able to provide follow-on loans with companies that are known quantities.

Q: Has the Covid-19 pandemic had a major impact on your lending to SMEs?

Society has been living with Covid for two years now. To begin with, we were very cautious both about providing new loans and managing the existing portfolio. We are pleased to see that all our borrowers have emerged in reasonably good shape and they continue to repay us on time.

The pandemic has accelerated the trend that started with the 2008 financial crisis; banks have been more reluctant to lend to SMEs, making the finance landscape more complicated for businesses to navigate. This has opened the door for alternative lenders such as private debt funds.

Q: What is the outlook for UK SMEs in the next five years?

We expect demand for borrowing from the SME sector to continue to be high; our challenge is to continue to find the right opportunities.

We are keen to exploit potential in the infrastructure and energy transition sectors as we look to fulfil our net zero commitments to help tackle climate change.

Although there will be challenges from rising inflation and supply chain interruption, we have a good pipeline of near-term prospects and have had an encouraging start to 2022.

How do I find out more about the PEPS?

For more information, please call us on 020 7485 7820 or email eps@beringea.co.uk.

Remember: when investing, capital is at risk and your ability to obtain tax reliefs will depend on your personal circumstances. Tax reliefs may also be changed by the government and such changes may be retrospective.