Arthur Andersen has launched a joint venture investment fund with HSBC Investment Bank to help rescue struggling companies.
The move, which is only the second time an accountancy firm has risked its own capital, saw a #45m cash pot – the Thames Turnaround Fund – established. It will be used as an alternative financing vehicle for companies which TTF believes to be viable but outside the risk profile of existing or other funders.
An Andersens spokesman said TTF combined the skills of the bank and accountants to salvage troubled companies and could be expanded in the long term. ?Depending on how the venture goes and its success, I am sure that the partners will consider doing another and possibly larger venture in the future. It is an area of finance not currently served,? the spokesman said.
TTF emerged from discussions between Andersens? former insolvency partner David Lovett and HSBC director Louis Franks. The two turnaround specialists sought an alternative method to help companies recover from financial problems.
A similar initiative was established by Price Waterhouse – now PricewaterhouseCoopers – in May last year. The firm?s Business Regeneration service provides equity stakes in struggling companies. John Snoden, joint leader of the PwC service, said the innovation had ?gone very well?.
He added: ?It is not good enough to deal with financial restructuring. It is important to have a service which helps get to business problems and brings to bear people who have real experience of doing this kind of work.? TTF made its first investment in BWA Group on 30 June. BWA provides charter and lease services to aircraft users and owns an engineering business, providing aircraft maintenance and component overhaul services. The investment, which replaced banking arrangements with Standard Chartered, allowed the group to be financially restructured and opened an inroad for investors.
The TFF investment, as senior debt funder, provided BWA?s management with the resources to continue developing the business. BWA?s management has now achieved a Stock Exchange listing.
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