While there certainly is no lack of businesses looking for investment from the banks, will the Business Growth Fund plug the gap?
The Business Growth Fund was established by Britain’s top six banks to invest £2.5bn in businesses with a £10m to £100m turnover. The Business Growth Fund will invest between £2m and £10m in each deal, with the fund taking an equity stake of between 10 and 50 per cent. As part of its commitment to build a relationship with the companies it invests in, the Business Growth Fund will also take a seat on the company’s board, VC style. But not everyone is satisfied with the fund. Luke Johnson, chairman of Risk Capital Partners – and seasoned entrepreneur – told the FT that the Business Growth Fund is just a “PR stunt” by the banks, which is doomed to failure. Johnson says that the fund will mean there is less room for “experienced sensibly-priced money”, a view that is echoed by Claire Madden of investment firm Connection Capital. Madden says that small businesses need bank funding at “reasonable terms” rather than equity funding. “At this level, companies want bank – not equity – funding,” she says. Spokespeople for the Business Growth Fund are confident the scheme will be a success, however. “This is not a typical private equity fund, far from it,” says a spokesman. “A private equity firm would be looking to do a buy out and leverage that investment as quickly as possible. We would be quite happy to work with other investors.” What do you think of the Business Growth Fund? Will it be useful for UK plc, or is it just another attempts by the banks to appease the general public? Leave your comments below.Picture source
We use cookies on our website to give you the most relevant experience by remembering your preferences and repeat visits. By clicking “Accept”, you consent to the use of ALL the cookies.
This website uses cookies to improve your experience while you navigate through the website. Out of these cookies, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may have an effect on your browsing experience.
Necessary cookies are absolutely essential for the website to function properly. This category only includes cookies that ensures basic functionalities and security features of the website. These cookies do not store any personal information.
Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. It is mandatory to procure user consent prior to running these cookies on your website.