Santander’s Breakthrough Growth Capital Fund Underpins Expansion
Santander’s Breakthrough Growth Capital fund is helping Leicester manufacturer Ridgway Machines fulfil its growth potential
- Company turnover: £4.2 million
- Sector: Manufacturing
- Ridgway Machines is an engineering company that found a profitable niche as a manufacturer of taping machines for the energy market.
- Ridgway needed to invest to maintain competitiveness, but its banking arrangements left it with both a shortfall in working capital and limited financial headroom.
- A Santander relationship team visited Ridgway to discuss the issues the company faced regarding its customer base and supply chain.
- Santander provided £700,000 through its Breakthrough Growth Capital fund, alongside support from the Government’s Regional Growth Fund.
- Santander funding enabled Ridgway to move into larger premises, invest in an enterprise resource planning system and to pursue new contracts. Payroll is now projected to expand from 30 to 50 over the next 18 months.
- Ridgway is now focused on growth with new senior management hires, and a proactive marketing and PR strategy
- Thanks to a major deal, the company has been able to repay its growth capital loan in full.
“Our aspiration is to be the world leader in our market niche,” says Stephen Hunt, CEO of Ridgway, a Leicester-based manufacturer of specialist machines. “That’s the standard we set ourselves with everything that we do.” Primarily serving the electrical and oil pipeline industries, Ridgway manufactures specialist taping and winding machines that produce reinforcement and insulation for pipes and conductors. It’s a specialised field, but with a permanent demand from a customer-base that includes Siemens, General Electric, and engineering company ABB, Ridgway sees huge opportunities for expansion.
Ridgway’s move into this niche was driven initially by requests from local electrical engine manufacturers, such as GEC and Brush. The company opted to specialise in – and ultimately offer – its own range of production machines.
Potential for growth
Stephen could see huge potential for growth thanks to rising demand in emerging markets such as China, and opportunities for joint ventures in the Middle East. However, Ridgway’s need to expand was constrained by its banking arrangements, specifically, a shortage of working capital.
Stephen saw a Sunday newspaper article on Santander’s Breakthrough programme, outlining the bank’s offer of a mezzanine-style Growth Capital fund aimed at fast-growth UK small and medium-sized enterprises. He got in touch directly with the bank. “We went straight out to see Stephen,” says James Cooksey, Director, Santander Growth Capital. “We spoke to him about the challenges and opportunities facing the company, the customer base, the space available, the supply chain and opportunities for joint ventures.”
Following that initial conversation, Stephen prepared a strategic plan and the Santander team began the process of fully assessing the business. Ridgway has a solid reputation for quality and innovation, and the Santander team liked what they saw. “It was encouraging to see how a small Leicester firm had established such a leading position in its market,” says Santander Relationship Director Jon Bennett. “I was also impressed by Stephen’s measured approach and his obvious pedigree in management and sales.”
The Santander team completed legal and finance diligence in 2012 and arranged a £700,000 package under the Breakthrough Growth Capital fund, alongside support from the Government’s Regional Growth Fund. This made an immediate difference, as Stephen explains. “I had funding of £460,000 from the incumbent bank,” he says. “With Santander’s support I now have £1.2 million in working capital.”
The funding made an immediate difference, not least by facilitating a move to bigger and more prestigious premises, giving the company yet more credibility in dealing with major energy industry clients. In addition, secure funding allowed Stephen to budget for a new enterprise resource planning (ERP) system. Perhaps more importantly, the funding has enabled Ridgway to pursue new contracts, confident that it would have the headroom to service any new business. New managers were hired, including a marketing director and a projects director, and the company is seeking to get its message across to a wider audience through proactive sales, improved PR, a better website and a greater presence at trade fairs. More recently, the appointment of a Finance Director has completed the team.
An ongoing priority is to create a more balanced stream of revenues. As things stand, a significant part of the company’s source of income is high-value orders, which can take months to come on-stream. Stephen wants to see a more regular flow of lower value orders. As the order books grow, the payroll is projected to expand from 30 to 50 within 18 months of receipt of the funding. With all this activity in train, the business has had a tremendous year, culminating in a major deal which has allowed Stephen to repay the growth capital loan in full while retaining the other banking facilities.
A brilliant approach
With its working capital strengthened by the recent deal, Ridgway is in a stronger position than ever to win new contracts and strike deals with partners. As James Cooksey sees it, Santander will continue to support the company’s growth. “If Ridgway requires further investment we will be on hand, and because of the relationship we’ve established, we see ourselves as the primary funding partner.”
For his part, Stephen welcomes Santander’s willingness to engage fully with the business. “Santander took the trouble to understand our business and our vision,” he says. “They’ve made a decision to take the time to work with the requirements of smaller businesses like ours. It’s a brilliant approach and I certainly see this as an ongoing relationship.”
What is Breakthrough?
Breakthrough is a programme of funding, business support, events and consultancy to help high-performing small and medium-sized enterprises (SMEs) leap to the next level of sustainable growth. Taking part in Breakthrough does not guarantee access to all elements, as each programme is tailored to meet the individual requirements of the business. To find out more, register your interest, and to see if you are eligible, visit the Breakthrough website: www.santanderbreakthrough.co.uk
All lending is subject to status.
Download this client story as a PDF file (502KB)
Relationship Director Comments
We spoke to [Stephen Hunt, Ridgway CEO] about the challenges and opportunities facing the company, the customer base, the space available, the supply chain and opportunities for joint ventures.