Business Growth Fund comes toWales with office in Cardiff
The Business Growth Fund (BGF), which has £2.5bn of financial power to invest in expanding firms, has confirmed it is setting up its first office in Wales.
Previously it covered south Wales from its Bristol office, with north Wales being served from Manchester.
But now the BGF, which was established by the UK Government in 2013 to provides equity investments ranging between £2m and £10m to small and mid-sized businesses, is opening an office in Cardiff in a move designed to bring it closer to firms in Wales seeking growth finance, as swell as business intermediaries advising them.
By its own admission, it has been disappointed with its deal flow in Wales to date. Its current investments are in Brecon-based multiple channel retailer BVG Group, with a £10m equity investment, and Cardiff-based waste management firm Wales Environmental, with £2m in a deal where it co-invested alongside the Development Bank of Wales.
Its first-ever investment in Wales was in Vale of Glamorgan-based industrial scaffolding business SHS Integrated Services. However, that £7m investment was written off after the business collapsed with the loss of nearly 150 jobs in 2016.
The BGF, which is funded by many of the leading high-street banks, is setting up an office at the Creative Quarter office scheme at the historic Morgan Arcade in the centre of Cardiff.
Its team covering Wales is regional director Paul Oldham, investors Edwin Davies and Ned Dorbin for south Wales, and Neil Inskip and Rhys Davenport in north Wales.
Mr Oldham, who once ran the Cardiff-based office of venture capital firm 3i, said: “We provide patient capital to businesses that want to maximise their growth. We are a long-term investor and a supportive minority partner to the companies we back, which means we don’t take control. Our investment approach is unique and is designed to be very attractive to business-owners – we provide support for many different growth strategies and we don’t force owners to sell their company.”
“There are many Welsh businesses that could grow more quickly and compete internationally if they had more funding and a stronger balance sheet. We are keen to meet those companies and to help them realise their full potential.”
Mr Oldham confirmed that the BGF had a number of potential investment deals into Welsh firms, ranging from £3m to £5m, on its radar.
He said: “We are currently talking to three companies in Wales. We have put proposals to them. And while it is early stages, I would be disappointed if we are not able to get one of them done.”
He said that, where appropriate, the BGF would look to do more coinvestment deals with the Development Bank of Wales.
The BGF typically invests, for the taking of non-controlling minority stakes, in businesses with revenues ranging from £5m to £100m.
Last week the Development Bank of Wales (formerly Finance Wales), which is wholly-owned by the Welsh Government, confirmed the location for its headquarters based in north Wales.
It will be based at the former Moneypenny offices on the Wrexham Technology Park.
The bank, along with co-investments from the private sector, aims to see £1bn invested in high-growth potential businesses over the next five years.
There will be around 50 staff permanently based at the new Wrexham HQ, although the lion’s share will remain at what was the former head offices of Finance Wales at the Capital Quarter office scheme in Cardiff.
Director of risk, compliance and legal Neil Maguinness, will be permanently based out of Wrexham when the new office opens.
Newly appointed finance director David Staziker will divide his time between the Cardiff and the headquarters. The Development Bank of Wales will also hold 50% of its board meetings in the new HQ.
The bank was advised by Knight Frank in the transaction, which has seen it take a five-year lease.
Partner Mark Sutton said: “The Technology Park provided the right mix of a prominent location with flexible, open-plan office space for the Bank’s new headquarters and we now are pressing on with the project management of the new fitout.”
The Development Bank of Wales offers loans from £1,000 up to £5m, as well as equity investments up to £5m for Welsh companies or businesses looking to move here.
It also manages the Help to Buy Wales scheme, which offers equity loans to people buying new homes in Wales.