Knights shifts from private equity to direct lending to fund next stage of growth

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12 October 2016

Beech: significant capital support without any change of ownership

Beech: significant capital support without any change of ownership

Fast-growing alternative business structure Knights Professional Services has moved on from private equity funding and giving away an ownership stake, and turned to a major European lender to finance to next stage of its expansion.

As exclusively revealed last month by Legal Futures, James Caan and fellow investors in the Staffordshire-based law firm have exited the business after four years.

Permira Debt Managers (PDM), the debt management and advisory arm of global investment company Permira, has provided nearly €3bn of capital to 86 businesses in 12 European countries since its inception in 2007 – but never before to a law firm.

They include most recently the likes of retailer Paperchase, top outdoor advertising company Exterion Media (formerly CBS Outdoor), and RSK Group, the UK’s largest provider of site investigations.

In the summer its direct lending fund, Permira Credit Solutions II, raised a further €800m from a range of blue-chip institutional investors.

The fund’s strategy is “to provide debt capital directly to medium-sized European businesses that are currently impacted by a broad reduction in lending from more traditional providers”.

Knights now has 500 staff operating from six regional offices in ‘secondary’ locations: Newcastle-under-Lyme, Chester, Cheltenham, Derby, Hale and Oxford. It has also brought in non-lawyers to broaden the service, hence the change of name in early 2015.

CEO David Beech said: “We selected PDM as our finance partner as they understood our vision for what we plan to achieve in the UK professional services sector. The investment has allowed us to achieve significant capital support without any change of ownership, management structure or impacting our team culture and ethos… We are delighted to be accelerating our growth with PDM.”

Knights said it was on “a trajectory to become the number one regional professional services business in the UK and is already the fastest-growing commercial law firm in the UK”.

Thomas Kyriakoudis, chief investment officer at PDM, said: “Knights exemplifies the type of successful business PDM backs.”

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