BoS stake hints at Braveheart AIM float

Published on Wednesday 23 November 2005 00:48

BRAVEHEART Investment Group, one of Scotland's most successful groups of private investors, has sold a 10 per cent stake in the company to Bank of Scotland Corporate.

This injection of funds values the Perth-based venture capital firm at around 11 million, and could bring the company closer to flotation.

A spokesperson for the Bank of Scotland corporate team said yesterday the deal underlines its commitment to the SME sector in Scotland, adding: "We have worked with Braveheart in a variety of areas, principally through the Smart equity scheme. It is an area with potential for growth."

The Smart equity scheme provides start-up funding for university spin-outs. BoS and Braveheart originally piloted the scheme with the University of Edinburgh, but it was then rolled out to six other Scottish universities.

Braveheart chief executive, Geoffrey Thomson said he now expects Braveheart to continue to provide market-leading returns and that an AIM listing is planned in the "not too distant" future. He said the company has registered a 39 per cent growth per year on exited deals, including Wolfson Microelectronics and MicroEmissive Displays, and 34 per cent per year growth in its overall portfolio.

He argued that this compares more than favourably with other tax-efficient vehicles, and pointed particularly to the VCT market where, out of 69 funds that have reported, 38 have negative growth rates, 30 single-figure positive growth rates, and only one has recorded a double-digit growth rate.

Set up in 1997 as an informal group of business angels, the Braveheart consortium now has just under 100 investors of which some 50 are shareholders.

It remains a specialist provider of equity finance, principally for emerging hi-tech university spin-outs. Current investments include Clapham House Group and Vibration Technology.

Earlier this summer, Braveheart Ventures announced a 10m tranche of private sector cash for Edinburgh and Glasgow University spin-outs to help speed the movement of Scottish research from laboratory to market.

The investment will back businesses that have already received public funds from the Scottish Executive and Scottish Enterprise Proof of Concept Programme.

Thomson said he is not keen to push companies that he has invested in to float for quick returns - 12 Scottish companies have floated in the past year, more than in any other 12-month period on record.

He said: "Unless the business is robust, they could trip up. Once they've got the money they've got it, but if the share price falls and they don't get the news flow, it can be desperate."