Development Bank gives boost to family construction business
Property and construction firm Jehu Group has secured £5.5m of financial backing to support the business in achieving its ambitious growth strategy, with funding from two key financial institutions.
The group, which is currently working on over 20 construction projects across south Wales, is on track to see its turnover grow 19% to more than £50m in the next year and reach in excess of £65m by 2019 after securing the support from the two industry lenders.
The family firm has received £4m worth of funding from the Development Bank of Wales, formerly Finance Wales, as well as a new £1.5m day-to-day banking facility from Santander to assist it with its expansion plans.
With its maximum lending cap increased to £5m in a single round, the £4m received by Jehu represents one of the Development Bank’s largest investments.
Comprising a £2.5m property development loan from the Wales Property Fund and a £1.5m working capital facility from the Wales Business Fund, the investment is an example of how the Development Bank can use a range of funds to help businesses get the right level of finance.
A significant proportion of the Development Bank funding will assist with the construction of a new property development in St Nicholas by the group’s residential division Waterstone Homes, which has had a very successful year after seeing its turnover rise from £9m to £21.4m.
Andrew Lycett, finance director at Jehu Group, said: “As a business, we have experienced strong growth over the last couple of years. We have ambitious goals for the direction of the business and anticipate significant growth over the coming years, all of which requires financing support.
“These new facilities will allow Jehu to plan with certainty for the future and invest with confidence, enabling us to secure success and jobs for both Jehu and the Welsh businesses that we work with.
“It is encouraging to see that the Development Bank and Santander recognise our strengths and potential, and we are immensely thankful to both organisations for investing in Jehu and making our future ambitions for the company all the more possible.”
The fund loan from the Development Bank will enable Jehu to grow its land bank over the course of a seven-year period in line with its wider business plan.
Karl Jones, property investment executive at the Development Bank and project lead on the property development loan, said: “We are delighted to assist this established and experienced family business with this development.
“This is the first time we’ve had the opportunity to assist Jehu Group with one of their developments and we look forward to potentially supporting further projects in the future.
“The development is being partfunded via the Wales Property Fund, which has been established to provide access to funding to assist with development projects in Wales.”
The St Nicholas Fields project, due to launch this month, is made up of 17 four and five-bedroom family homes which will retail between £515,000 and £690,000.
The St Nicholas development alone will support over 100 jobs in the local economy and provide funding for other local improvements such as highways, education and community facilities in excess of £450,000, agreed during the planning process.
In addition to the capital from the Development Bank, a switch of commercial banking provider to Santander Bank has also enabled Jehu to receive match funding in the form of a £1.5m overdraft facility, which will go towards financing the everyday operations of the company.
The group was able to secure the loan after impressing Santander with its future business strategy as well as its record growth over recent years, which made it eligible for the bank’s large business unit.
Janette Bennett, relationship director at Santander Corporate & Commercial, said: “Based on its fantastic heritage, Jehu has become an established, trusted brand in the south Wales region, and has positioned itself successfully to invest for growth.
“We look forward to supporting the management team as they build the business further.”
The new overdraft facilities will improve the company’s ability to manage short-term cash-flow demands, providing greater certainty for future investments.