BGF launched as £2.5bn fund for the provinces
The £2.5bn Business Growth Fund (BGF) has been launched with a promise from business secretary Vince Cable that the fund – intended to provide much needed finance for small businesses – will have a strong emphasis on provincial Britain.
It will be headquartered in Birmingham, with offices in Manchester, Edinburgh, London and Bristol. A recruitment drive to employ 100 staff has already been launched.
The plan is that over the next few years the BGF will invest in hundreds of UK businesses that need long-term funding to create new products and services, sell to new markets and create new jobs for UK workers.
BGF will invest between £2m and £10m per business in return for a minimum ten per cent equity stake and a seat on the board.
The fund is backed by a group of banks – Barclays, HSBC, Lloyds Banking Group, Royal Bank of Scotland and Standard Chartered – in conjunction with the British Bankers Association.
The website went live yesterday (19 May) but prior to that ten companies had already put themselves forward for investment consideration.
At the launch in Birmingham’s Council House, the fund's chairman Sir Nigel Rudd was asked by Insider whether its investment parameters - businesses with a turnover of between £10m and £100m - were set at too high a level to be of use to many small businesses.
"I see this as being in exactly the right place," he said. "This will give confidence to angel investors to put money into a business knowing that there is some follow up investment."
Cable said: "This (access to finance) is a particular problem for SMEs. A lot of them are having great difficulties."
He promised the fund would have "a strong emphasis on provincial Britain" and stressed that the investment is private capital and not taxpayers' money.
Fund chief executive Stephen Welton added: "It is important to note that the BGF is not replacing bank lending. It is adding what doesn't exist today which is long-term capital. In terms of criteria the most important thing is the growth potential of the company.
"It will be very regional. People working there will be plugged into the local community."
Jonathan Hurst, chairman of KPMG in the North, said the launch would be a fundamental stimulus for a number of the region’s entrepreneurs.
He said: "This represents a positive move for the UK’s fast growing and entrepreneurial businesses, and provides a good level of certainty to realise growth ambitions.
"Small businesses remain the backbone of the UK economy and this injection of funding will encourage this sector to move forward with well thought out growth strategies that will undoubtedly assist in the nation’s recovery.
"The onus is now on small and medium-sized businesses in the North West to seize the opportunity and exploit all available routes for growth."
For more information visit: www.businessgrowthfund.co.uk
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