The asset finance arm of British challenger bank Paragon has acquired Edinburgh-based SME lender Premier Asset Finance.

The deal will see Premier work with Paragon to expand asset finance across a range of asset classes such and wheeled assets and IT.

Paragon acquired Premier for an initial consideration £8.5m (€9.7m) from Paragon Group’s existing cash resources, and a further £12m is payable over the next five years, subject to performance.

The acquisition has been given regulatory approval.

The financial services, corporate finance and automotive advisory wing of Grant Thornton advised on the deal.

Richard Doe, managing director of Paragon Bank, emphasised Premier’s work with SMEs, and hoped the acquisition would drive expansion in this area.

He said: “I’m delighted to welcome the Premier team to Paragon Bank’s asset finance division. Premier is one of the UK’s leading SME asset finance brokerages and, working together, we have a unique opportunity to expand our asset finance business by forging new and exciting relationships with SME customers.”

Kevin Davidson and Mark Ripley, joint managing directors of Premier, said: “Paragon shares our ambitious growth plans and is an excellent cultural fit for Premier.

“We are very excited to be joining Paragon Bank’s asset finance division and look forward to this new chapter in our development.”