Catering equipment supplier loaned £500k to buy IP rights and save on royalties

Sephra Europe chocolate fountains

A specialist supplier of waffle, donut and chocolate machines to the UK restaurant market has secured a £500,000 loan that will enable it to purchase the intellectual property of its branded products – previously held by a US company – and expand into new markets. 

Kirkcaldy-based Sephra Europe agreed the unsecured loan with alternative SME credit specialist Caple and expects to hire a further 10 people and more than double its turnover to £10m over the next three to four years if its plans come to fruition.

Sephra is a wholesale distributor of food equipment selling to restaurants, cafes and hotels groups as well as local catering distributors. The business also exports to 67 countries globally.

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It has used the loan to purchase the IP of its branded products, giving the company full control of these items. By removing the need to pay royalties, Sephra now also retains all profits from each sale.

David Archer, managing director of Sephra (below), explained: “We wanted to move quickly, secure the IP rights to our products and to press ahead with our growth plans. The Caple team understood our business and responded by completing the deal in record time.

“We are now able to drive innovation and expand into 20 to 30 new markets across Asia, Australasia, Central and South America, providing huge growth potential. By removing the need to pay royalties, we’re already seeing a positive impact on the bottom line.”

Sephra has grown by innovating and expanding its product range. Starting with chocolate fountain machines, the business expanded into waffle, pancake, donut and popcorn makers. It also sells ingredients including chocolate, add water only waffle mix and crepe mix.  Last year, it sold over 300 tonnes of chocolate.

Sephra will also use the loan to drive product innovation. For instance, the business created a self-service popcorn maker for supermarket Asda and now sells more than one million tubs of popcorn a year in the UK. It is aiming to replicate this success with further retailers worldwide.

Karl Hodson, director of corporate solutions at BTG Advisory, which advised Sephra on the funding, said: “We were impressed with the Sephra’s management and product sustainability. The loan through Caple fits perfectly with the profile of the business. With the deal agreed, Sephra has now secured the full rights to the products it sells and has the ideal platform to grow exports.”

The loans Caple facilitates are part of BNP Paribas Asset Management’s SME Alternative Financing direct lending platform, which enables SMEs to access funding from institutional investors.

SMEs often encounter difficulties raising money without having tangible assets to put up as security to banks. That can mean they instead have to make personal guarantees or dilute their ownership by issuing equity.

Caple claims to be the first company in the UK to provide access to unsecured lending based on the future cash flows of the SME. It worked alongside high street bank RBS in the deal with Sephra.

Tags : BTG AdvisoryCaplecatering equipmentloanSephra Europe
Andrew Seymour

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