Belfast Telegraph

Business Growth Fund gearing up to invest in Northern Ireland

By Margaret Canning

The Business Growth Fund - the UK body set up to give equity funding to small to medium sized firms - is set to announce its first Northern Ireland investment.

Chief executive Stephen Welton is in Northern Ireland to meet the management team from the company - thought to be based outside Belfast - which has won a significant cash injection from the fund.

The fund, an independent company capitalised by the banks, typically invests between £2m and £10m in firms with turnover of at least £5m.

Mr Welton said the fund had spoken to around "30 or 40" firms in the province about giving them cash in return for equity shares.

"There is no shortage of entrepreneurial businesses in Northern Ireland," he said.

The province is the last of the UK regions to receive Business Growth Fund backing after it was set up in 2011.

Mr Welton defended its slowness in making an investment here.

"We have taken four years to build up a big presence across the UK and that's a very short period of time.

"What we are thinking about is what we can achieve over a 20 to 25-year period.

"We have had to start by building up confidence and trust and that doesn't happen overnight."

Companies in Northern Ireland - which were more dominated by family-run enterprises - also tended to be accustomed to financing through debt and so tended to need to be educated about equity funding.

"We need to have the right balance between debt and equity financing," explained Mr Welton.

He added: "Dramatic debt, whether for an individual or country, has been shown to be unsustainable. One of the reasons for the success of the German Mittelstand (SMEs) has been the long-term collaboration between banks, businesses and providers of long-term capital."

And he said there was no particular timetable for further investments in Northern Ireland firms: "We are very confident that we will have more investments here.

"Whether that's a trickle or a flood depends on the entrepreneurs of Northern Ireland."

The Business Growth Fund has made around 100 investments around the UK. "That is £650m that wouldn't have been invested without us."

There were regional variations in its investments, with its tech projects largely focused on London.

He said the firm had made a "couple of investments" in Wales and a larger number in Scotland, many of which were firms in the north east of Scotland and linked to the oil and gas industry.

Its portfolio companies in the UK have been able to go on to bigger and better things - including online ad company Unruly, which has been acquired by News Corporation for £58m.

Mr Welton said the fund was pleased with such outcomes: "We always like to celebrate success. Unruly was a start-up in Tech City and a very different sort of mindset to more established family businesses around for a long period of time."

And Barburrito, another client company, has been in the headlines for buying up Pinto Mexican Chicken, which has five restaurants in Edinburgh and Glasgow.

Belfast Telegraph