British Business Bank commits £50m to Soho Square Partnership Capital Fund II

The British Business Bank has announced a £50 million cornerstone commitment to Soho Square Partnership Capital Fund II, supporting the provision of flexible growth capital to established UK small and mid-sized businesses looking to scale, invest in new technology or pursue acquisitions.

The commitment, alongside investments from several US institutional investors, is designed to increase the availability of structured capital for founder-owned businesses that require funding beyond the scope of traditional bank lending but do not wish to significantly dilute ownership through private equity.

London-based Soho Square Capital specialises in lower mid-market investments, providing structured capital solutions that combine primarily debt-based funding with strategic support typically associated with private equity investors. The firm’s partnership capital model is intended to help businesses navigate periods of transition while allowing founders to retain greater control of their companies.

The new fund will focus on businesses operating within the Government’s Industrial Strategy priority sectors, particularly digital and technology, and professional and business services. It will target established companies with EBITDA of up to £15 million and annual turnover of up to £200 million.

At least 75% of the fund will be invested in UK businesses, with a particular emphasis on supporting companies across the UK’s nations and regions. The fund aims to address what the British Business Bank describes as a structural gap in growth capital for smaller businesses, enabling them to expand while remaining headquartered in the UK.

The investment also aligns with the British Business Bank’s five-year strategic plan, which prioritises capital deployment into the Government’s eight Industrial Strategy sectors. As a cornerstone investor, the Bank will also have the opportunity to participate in co-investments alongside the fund.

Adam Kelly, Managing Director and Co-Head of Funds at the British Business Bank, said: “This commitment is directly addressing a gap in the debt market. It will unlock flexible capital solutions for established businesses with strong growth potential, an area currently underserved by other lenders.

“It will create more jobs and drive long-term economic growth across the UK’s nations and regions, while strengthening the modern Industrial Strategy sectors which are critical to the UK’s future competitiveness.”

Blair McDougall, Minister for Small Business and Economic Transformation, added: “Through our Modern Industrial Strategy, this Government is ensuring businesses with the highest growth potential have the capital they need to succeed here in the UK.

“This commitment backs dynamic SMEs in key sectors, helping them scale, create jobs and drive growth, to raise living standards across the UK.”

Walid Fakhry, Co-Managing Partner at Soho Square Capital, said the investment would enable the firm to expand its support for founder-led businesses.

“The Bank’s backing lets us do more of what we set out to do: give founder-owned businesses the institutional capital they need, on terms that let them stay in control and keep building,” he said.

“That is what our partnership capital is about, and having the Bank behind it means more high-quality UK businesses can take their next step without giving up the reins.”