Schroders acquired a 25% stake in Dutch direct lending firm NEOS Business Finance, an alternative debt financing platform for small- and medium-sized enterprises in the Dutch market.
The firm was launched in 2012, and gives SMEs access to loans through a standardized issuance and loan terms process.
NEOS Business Finance will provide investment advisory services for Schroders clients investing in SME financing. The firm has launched one investment fund, which was funded by two large Dutch pension funds. The pension funds could not be learned by press time. The firm also works with Dutch bank ABN AMRO to source SMEs in need of financing.
“Small and medium enterprises in Europe are increasingly looking to obtain debt financing from non-bank lenders,” said Philippe Lespinard, co-head of fixed income at Schroders, in a news release. “Part of this trend is explained by the decreasing supply of credit in that space by commercial banks (that) face increasingly onerous capital requirements on loans perceived as risky by regulators and supervisors.”
Mr. Lespinard added that, on the demand side, borrowers expect faster approval times and lower collateral requirements than banks’ traditional processes and systems allow. Those conflicting trends allow for non-bank participants to provide growth financing to SMEs on simpler and faster terms, he said.
At the same time, institutional investors are becoming more familiar with providing growth financing to SMEs “in return for higher yields than are available in the public markets,” he said. “That interest is also coupled with a desire to make a positive social impact on the community by favoring local job creation.”
As part of the deal, Michel Vermeulen, country head for Benelux, and Boudewijn Jansen, business manager, fixed income, both at Schroders, will join the NEOS Business Finance board.
Further details on the deal, including the price of the stake, could not be learned by press time. A spokeswoman for Schroders was not available to comment by press time.
Schroders has £313.5 billion ($446 billion) of assets under management.