TDC Impact Fund – FAQs answered by Investment Director Jon Petty

12/06/2024

Since joining TDC in 2023, I have really enjoyed the challenge of helping the business continue its ambitious growth journey. TDC has made great progress in the last 18 months, building a strong reputation of lending to mid-market private equity-backed business across the UK. Today, however, I wanted to shine a light on our second strategy – the TDC Impact Fund. TDC receives many questions around the kinds of businesses its looking to support, so I thought it would be helpful to set out the answers to the questions TDC are asked most frequently! TDC are always open to a discussion about prospective investment opportunities, so please contact if you think we could help.

What is the size of the Impact Fund and where does the money come from? What is the typical size of an investment?

The Impact Fund is £70m, supported by two important regional investors – the Greater Manchester Pension Fund (GMPF) and the British Business Investment (BBI). Typical investment size is between £1-7m.

What does “impact” mean in the context of TDC’s Impact Fund?

For TDC Impact, the mandate is to stimulate economic activity and job creation/protection in the North of England. As a national business based in Manchester, and proud of its Northern roots, supporting the levelling up agenda is important to TDC. Businesses have suffered challenges in the last few years, including a global pandemic, geopolitical tensions, supply chain issues, inflation and interest rates – TDC’s Impact Fund can support businesses to establish a bespoke and robust funding structure so they can look forwards, and not backwards.

What kind of transactions can TDC Impact support?

TDC Impact can support a wide range of transactions, including refinancing existing loans, growth capital, funding acquisitions or supporting a transition in ownership via an MBO (or a mixture of all these). Unlike TDC Main Fund’s private equity focussed strategy, there does not need to be a financial sponsor involved – TDC Impact enjoy working with owner managers to solve their funding requirements. Often, TDC Impact can provide the financial backing that a company needs and to become “match fit” for a future private equity round, with a strong track record in supporting companies along this journey. For example, TDC historically supported the early phases of Clearway Group, Lomond Capital, Tandem Bank and NRG Fleet Services who grew successfully and subsequently transacted with Sponsors Next Wave Partners, LDC, Pollen Street Capital and Palatine Private Equity respectively.

Does TDC Impact always have to be the only lender in the structure, or does it work with other forms of lending?

TDC Impact has worked well with other funders, including banks and ABLs which can be a very cost-effective financing option, however lending parameters or the size of the asset base may result in a shortfall against the funding needed. TDC Impact can provide additional funding to fill this gap, tailoring funding packages to the situation and requirements at hand.

Does the business need to be profitable to secure funding? Does TDC Impact back turnarounds?

Most of the businesses TDC Impact support will be profitable, however consideration would be given to businesses approaching breakeven with strong visibility of revenues and looking to move to profitability within 12 months. TDC Impact is not looking for operational turnaround opportunities, however if there is a demonstrably performing business, it can get involved in supporting the re-calibration of a capital structure, which may have become unsustainable due to historical trading issues.

What kinds of sectors does TDC Impact support? Are there any sectors that the Fund doesn’t invest in?

TDC Impact is sector agnostic. Ultimately, the Fund is looking for ambitious management teams with a compelling proposition, a clear plan and alignment to the Funds objective to drive growth and employment in the North. TDC Impact find businesses aligned with this across a range of sectors. The one exception is that it does not lend against investment property or to property development schemes, as it is looking to support trading businesses.

Why do companies choose TDC Impact?

There is no one single factor and different companies will have different reasons. The common theme would be flexibility – TDC Impact design funding packages that fit with the strategy of a business, rather than having a “one size fits all” approach. TDC Impact is on hand to help the companies invested in and can support by drawing on TDC’s vast experience, access to non-executive network and wider skills and ability to secure capital. TDC Impact is also a flat organisation, ensuring decisions can be make quickly which most SMEs value greatly!