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Business Growth Fund to halve qualifying turnover

Stephen Welton, the chief executive of the Business Growth Fund, has told the Daily Telegraph that he expects the Business Growth Fund’s core market to be firms with sales between £5m and £50m.

The Business Growth Fund was set up by Britain’s top five banks to invest £2.5bn in businesses with a £10m to £100m turnover. The Business Growth Fund was given a mandate to invest between £2m and £10m per deal, with the fund taking an equity stake of between 10 and 50 per cent, as well as taking a seat on each company’s board.

However, by only investing in businesses with a minimum £10m turnover, this would effectively exclude 97 per cent British SMEs.

Its chief executive Stephen Welton now says he expects the fund to target businesses with sales of between £5m and £50m.

He told the Daily Telegraph: “The investment case drives us, not turnover. If we rigidly applied a £10m cut-off in Scotland and Wales, you’d exclude many, many businesses.

A company turning over £10m is of a size where it’s suitable to take on a partner but it might not be a very interesting company. A company turning over less that has grown quickly and has a good management team, we will look at.

This will be seen as a positive step by the Business Growth Fund. Lowering its qualifying criterion to £5m will significantly increase the number of businesses able to apply.

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