Business Growth Fund sets sights on Central Belt

THE £2.5 billion Business Growth Fund (BGF), a government-inspired funding initiative, is expanding in the Central Belt and has made a number of high-profile appointments to help grow its investment portfolio.

Munro: recruitment drive. Picture: Phil Wilkinson

Simon Munro, Scotland director at the BGF, is bringing in Gemma Hamilton from Glasgow-based Maven Capital Partners, along with PwC’s David Gammie and Parkmead’s Kathryn Ramsay.

The near-doubling of the headcount north of the Border will help to broaden its focus from the oil and gas sector into other parts of the Scottish economy. The fund was launched in 2011 and has so far invested in five companies in Scotland, three of which have been in the energy industry.

Munro told Scotland on Sunday: “The Central Belt has been starved of this kind of investment since 2002, when 3i left the market. “Before the fin­ancial crisis, the banks were lending against high multiples of profits, but now they’re back to lending at maybe just two times earnings. That’s fine – in fact it’s good for the banks to be back to lending in that kind of market – but it leaves a gap for funds such as ourselves.”

In exchange for an equity stake of at least 10 per cent and a seat on the board, the BGF will pump between £2 million and £10m into fast-growing companies.

The fund – supported by Barclays, HSBC, Lloyds Banking Group, Royal Bank of Scotland and Standard Chartered – seeks out firms with revenues between £5m and £100m a year. So far, the BGF has pumped £7.8m into pipeline specialist Stats Group, £6m into software firm Petrotechnics and £2.25m into well preparation outfit Aubin. Morphsuits fancy dress owner AFG Media received £4.2m, while £3.85m has been invested in M-Squared Lasers.

Gary McEwan, a director at the Entrepreneurial Exchange, said: “The BGF is good if your company fits the mould, but it would be good to see it widen its criteria to include more businesses.”