• Business growth fund 


    In today’s improving economic climate, businesses across the country seeking to maximise growth opportunities are requiring a mix of different funding options to complement traditional bank lending. One option available is investment from partners, such as the Business Growth Fund described by Jane Clark Hutchison, Senior Director, Commercial Banking Scotland.


    The Business Growth Fund (BGF) was set up to help support the government’s aspiration to offer greater access to finance for small and medium sized businesses in the UK. BGF typically invests growth capital of between £2m and £10m for a minority stake in fast growing UK businesses to help them reach that next stage of their development.


    BGF looks to invest across the span of SME and mid-market business, typically with turnover of £5-100m. The growth capital it offers is long term equity funding that allows a business to accelerate its expansion, manage the risks of growth in a sustainable way, keep control and work in partnership with an investor to build shareholder value.


    BGF funding is often attractive to owner-managed businesses as this proves a vital source of capital for those businesses who are looking to grow but find that debt funding is not enough to get them to the next stage.


    Lloyds Bank and BGF

    As a major shareholder, along with a number of the other banks, Lloyds Bank supports through our coverage teams across the country, in both the SME and mid-market businesses. We maintain an active dialogue with BGF in terms of the opportunities that exist within our book, but the relationship is very much two-way and we work in partnership with BGF and management teams to achieve the best funding solution for the client.


    A key point about BGF is that it has a long-term investment strategy. BGF typically invests over 5-10 years allowing for support through the cycle, leading to sustainable longer term growth.


    A BGF investment is also proactive in supporting a company's board, bringing a great network of peers from a variety of different sectors. This expertise can be tapped into, for example, helping the board develop the business by driving expansion into key markets.


    Who are BGF?

    Founded two years ago with a £2.5bn investment from the five major UK banks, Business Growth Fund (BGF) offers more than just funding.  


    BGF’s main aim is to offer businesses access to long-term capital and equity. “All businesses need time and capital to grow,” explains Stephen Welton, BGF’s Chief Executive, “and our aim is to invest time and support in local professional communities and business networks. The average investment is £5m and, since the launch in 2011, BGF has invested close to £200m. But our aim is to go beyond providing just funding for growth.”


    According to Stephen, “the partnership element is critical, and the support and expertise a company can access has a greater, longer lasting impact.” Among the expertise BGF clients can access are four independent non-executive directors (NXDs) and NXDs from the five major shareholder banks.


    While remaining completely autonomous in an operational sense, Stephens says “we very much work in tandem with banks, reinforcing the relationship by strengthening the company balance sheet and changing the nature of dialogue between a bank and its customer.”


    BGF has also established a talent network to support those businesses it invests in. “It’s a great opportunity to marry extremely experienced business people with the companies itself,” concludes Stephen.

12/3/2021 2:01:48 PM