Shard Credit Partners backs simultaneous management buy-outs of BW Legal Services Ltd and PRAC Financial Ltd

12 February 2019

Shard Credit Partners backs the simultaneous management buy-outs of BW Legal Services Limited and PRAC Financial Limited in the North East by co-founder and COO Rachael Withers.

 

Shard Credit Partners announces the completion of the management buy-outs (“MBO’s”) of both BW Legal Services Limited (“BWL”) and PRAC Financial Limited (“PRAC”, together, the “Group”) by Rachael Withers, COO and co-founder of both businesses.  The two side-by-side MBOs completed and funded simultaneously on February 8^th, 2019.  Shard Credit Partners acted as exclusive financing provider, underwriting £13.5 million of committed senior secured unitranche facilities to complete the two deals.  The innovative financing structure has enabled the simultaneous refinancing, recapitalisation and shareholder re-organisation of the Group, whilst also providing committed acquisition firepower to grow the businesses.

BWL was founded in 2009 by Rachael Withers and Sean Barton and is the UK’s largest independent law firm specialising in debt recovery services and is dual regulated by both the Financial Conduct Authority (“FCA”) and the Solicitor’s Regulatory Authority (“SRA”).  The Group is based in Leeds, West Yorkshire and employs around 250 staff.  BWL acts as a one-stop-shop for high volume debt collection and litigation, focussed on delivering market-leading recovery solutions in an ethical and fair manner to clients in both the highly regulated consumer debt sector as well as the traditional commercial debt sector. Clients range from established sectors such as debt purchasers, financial services, private parking, commercial and energy.  PRAC is an FCA regulated debt purchase vehicle that acquires portfolios of non-performing consumer and commercial debt.

Withers is one of the first ever non-lawyer owners of a debt recovery and litigation law firm.  She has been responsible for running some of the largest collection and litigation projects in both the commercial and consumer credit environments, including one of largest insolvency collect-outs in British corporate history for the administrators on Entertainment UK, a group company of Woolworth Group that had syndicated lenders funding aged debtors with a value in excess of £360 million at the time of administration.

Andrew Madden at Gateley plc (“Gateley”) acted as legal adviser to Shard Credit Partners.  Andrew Cowan at Gateley led the legal due diligence review.  John Connor at Womble Bond Dickinson (“WBD”) acted on behalf of both BWL and PRAC.  Grant Thornton (“GT”) was appointed to conduct financial due diligence for the Lender.  BWL and PRAC were advised by Andy Haigh at BHP Corporate Finance (“BHP”), a corporate finance advisory business based in Leeds and Sheffield.

Shard Credit Partners has now completed three investments from its inaugural fund, with its second and third investments both completing on the same day (February 8^th, 2019).  In addition to the simultaneous MBOs of both BWL and PRAC in Leeds, Shard Credit Partners also completed and funded the MBO of GadCap by its senior management team in Newcastle on February 8^th, 2019.

 

Greg Lomas, CIO of Shard Credit Partners commented, ‘completing two, let alone three MBOs in one day is a first for us, we very much look forward to completing our fourth investment in the coming weeks’.  Following these investments, Shard Credit Partners Fund I will be around one-third deployed.

 

Typically, Shard Credit Partners aims to invest as the sole finance provider through senior secured unitranche loan structures, in amounts of between £5-15 million per borrower.  Alastair Brown commented, ‘the overall strategy is to invest where we can provide transformative growth capital to unlock a faster rate of growth than would otherwise be achievable with more traditional forms of lending.  The Fund’s first investment into SKS Business Services Ltd in May 2017 has already resulted in a doubling in customer numbers and EBITDA for that business in less than one year’.

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