However, the chief executive of the Business Growth Fund (BGF) has insisted that its work has “only just begun” as the bank-backed investor eyes more deals to support companies’ expansion plans.
Stephen Welton said: “When BGF launched in 2011, smaller and mid-sized companies were largely overlooked by equity investors, access to long-term capital was scarce and the perception was that demand was non-existent.
“That was completely wrong. The £500m that BGF has rapidly invested would not have been provided without us. That has driven not only investment, but created thousands more jobs in our portfolio companies and unlocked tens of millions of additional debt capacity.”
BGF is backed by banking groups Barclays, HSBC, Lloyds, Royal Bank of Scotland and Standard Chartered and has invested in 16 Scottish companies since it was launched four years ago.
The firm makes initial investments of between £2m and £10m, with the potential for extra funding to support further growth. The cash tends to be provided in return for a minority equity stake and a seat on the board for a BGF director.
Among the businesses that have received funding is eyecare chain Duncan & Todd, which received an initial £5.6m in December 2013 and a £3.5m follow-on finance package in February.
Frances Duncan, managing director at the Aberdeen-based chain, which recently acquired rival 20:20 Opticians, said: “As well as the cash investment, BGF has also offered advice to help us expand our manufacturing division.”
Last month fellow Granite City company Rovop secured £10m from the fund. It said the cash injection would help expand its fleet of remotely-operated vehicles to about 50 units over the next three years on the back of growing demand for its technology and services as offshore oil and gas companies seek to reduce their costs in response to the fall in crude prices.
BGF has also backed lasers and photonic instruments specialist M Squared, based at the West of Scotland Science Park in Glasgow, with £3.85m of growth capital in 2012 and a further £750,000 in February.
Graeme Malcolm, who co-founded the business in 2005 with Gareth Maker, said: “We’ve been expanding our business for some time and have been making great headways in world markets. This latest investment will provide important support as we continue to pursue our ambitious growth objectives.”
Other investments include an £8.5m deal last year with ACS Clothing, the Glasgow-based suit hire business, and £4.2m for AFG Media, the company behind the Morphsuits range of fancy-dress costumes.
BGF’s £500m milestone coincided with its strongest-ever quarter, with £71m committed in the first three months of the year, and the fund now accounts for one in every three investments at this end of the market.
Simon Munro, regional director for Scotland at BGF, said demand for investment is surging amid a “clear indication of entrepreneurial drive and a supportive business environment” north of the Border.
He added: “Businesses we have already backed are growing fast, gaining market share and demonstrating that they are capable of competing on a national and international stage, given the right backing and support. Yet we know that there are many more companies out there – from a wide range of sectors – which can benefit from the type of support we provide.”