Irwin Mitchell has secured a £60m rolling banking facility along with an additional £30m buffer in a joint deal with HSBC, Lloyds and Royal Bank of Scotland (RBS).
The finance package replaces the firm’s existing overdraft and is committed for a four-year period initially.
According to the firm’s latest LLP filing, its overdraft facility increased by £4.6m between 1 May 2012 and 30 April 2013, making the total overdraft £19.8m at 2012/13 year-end.
The majority of the new £60m core funding will be provided by HSBC, which has committed 50 per cent, while Lloyds and RBS are responsible for 25 per cent each. The ‘accordion facility’ or additional £30m buffer will be split across the banks in the same proportions.
Irwin Mitchell chief financial officer Andrew Merrick, who joined the firm in April 2013 from airline and logistics firm Dart Group PLC (12 December 2012), said his job since joining had been to assess the firm’s forthcoming three-year strategy and put committed funding in place to support that.
Merrick said some of the facility would be used to fund work in progress, which he estimated to be around £20m on the basis of the firm’s current debt profile. He said the rest was there to support its growth ambitions.
He would not be drawn on the details of individual deals but confirmed there were always transactions in the pipeline and said: “This is a four-year facility so we wanted a reasonably large figure so that if a big opportunity comes along we can do the right deal, consistent with our strategy.”
He said the firm planned to invest in both its private client and commercial businesses and added: “We don’t have to borrow every penny of that £60m, the individual deal has to make sense”.
He said the £30m buffer was also there to facilitate growth ambitions and that it was unlikely the firm would use it for integration as that should be self-funding.
Irwin Mitchell group chief executive John Pickering welcomed the funding package, describing it as a clear show of support from the firm’s banking partners.
The firm has longstanding relationships with both HSBC and RBS. Merrick said the firm could have secured the same level of funding from the two existing banking relationships but chose to bring in Lloyds to encourage a reciprocal relationship with the bank.
Earlier this month Irwin Mitchell subsidiary Ascent acquired the former recoveries arm of defunct Manchester-based Halliwells, HL Interactive, in a deal that completed on 28 February. This was followed by the TUPE transfer of all 62 HL Interactive staff into the business on Monday 3 March (4 March 2014).
It was the fifth deal completed by Irwin Mitchell since it became an ABS in 2012 (20 August 2012). The firm’s other acquisitions are PDP Management Services in October 2012 (12 October 2012), Elliot Davies and Fraser Gowrie Johnston last Spring and personal injury firm MPH Solicitors in November (14 November 2013).
The firm broke through the £200m turnover mark for the first time at the end of 2012/13, with total revenue climbing 5.3 per cent rise from £190.1m to £200.2m at the end of the most recent financial year (29 July 2013).