BGF launched as £2.5bn fund for the provinces
The government's £2.5bn Business Growth Fund (BGF) has been launched in Birmingham 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. 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.
It will be headquartered in Birmingham with further offices in Edinburgh, London, Manchester and Bristol. It will have up to 100 staff and is currently recruiting investment professionals.
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.
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 said: "It is important to note that the Business Growth Fund 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. We are convinced that in the Midlands there will be a lot of interest in this.
"And we want the bulk of the capital to go into business not into advisory fees."
Wouter Schuitemaker, investment director of inward investment organisation Business Birmingham, said the arrival of the fund in the city is good news.
"It’s a coup for Birmingham that they have decided to locate the headquarters here. And it's a great opportunity for companies based here to get face time with them," he said.
