BGF’s Scotland and Northern Ireland team has reported another strong year.
It said it delivered five successful exits for the bank-backed investor during 2023, while also pumping £33 million into local economies.
In total, BGF backed 44 new businesses and invested £430m across the UK and Ireland in 2023.
What exactly is BGF?
BGF is one of the largest growth capital investors in the UK and Ireland.
Its focus as a minority partner is to provide backing, via capital and expertise, to support companies and management teams to achieve their growth aspirations whilst retaining control.
This is seen as particularly important just now, with Scottish businesses reporting delays to growth projects because of funding challenges.
The cost-of-doing-business crisis is frequently named by firms as a key challenge.
According to BGF, its investment activities have helped to support acquisitions, new product development, roll-out strategies and succession planning, as well as directly providing working capital and strengthening balance sheets for portfolio companies.
Scottish investments during 2023 included a £4.5m investment in Stellar Omada – a fast-growing Edinburgh-headquartered technology services company – and a £2m investment into STC Insiso, an Aberdeen-headquartered software solutions firm.
BGF has also recently invested £8m in Trojan Energy, another Aberdeen-based business that has developed and commercialised an innovative “flat and flush” electric vehicle charging system for on-street users.
The Trojan deal was completed alongside the Scottish National Investment Bank as part of a £26m funding round.
Follow-on investments continue to support growth opportunities across BGF’s existing Scottish portfolio.
In the past year these have included a multi-million-pound investment in Scottish Dental Care Group, a national provider of NHS and private dental treatments.
There was also a further £2m investment in MRM Global (re-branded to Hyble), a leading provider of marketing technology to the global drink and hospitality sector.
Five exits worth more than £260m
In addition, BGF announced five successful exits in Scotland and Northern Ireland during the year at a total value of over £260m.
It said these delivered a combined return of about 2.3 times the size of its investments.
The exits included Lanarkshire-based Kick ICT and Aberdeenshire firm Stats (UK).
Kintore-based pipeline engineering specialist Stats was BGF’s first investment in Scotland.
Investment helped drive spectacular growth at north-east pipeline company
BGF invested a total of £16 million in Stats between 2012 and 2023, helping the company expand its international footprint and invest in people and product.
As a result, the business more than quadrupled revenues and is said to have generated a “very healthy return” for stakeholders on exit.
BGF said its exit from Bellshill-headquartered Kick ICT exit completed during the second half of 2023 and delivered a strong internal rate of return of 38%.
Over the past year we’ve backed a diverse range of brilliant businesses.”
Patrick Graham, BGF’s head of Scotland and Northern Ireland, said: “I’m very happy with the performance the team has delivered, particularly given the economic backdrop.
“Over the past year we’ve backed a diverse range of brilliant businesses, with both new and follow-on funding packages. At the same time, we secured strong exits from five portfolio companies, delivering us a strong rate of return.
“The results of our 2023 activity demonstrate not only the success of BGF’s investment model but also the quality within our portfolio.”
Mr Graham added: “BGF will continue to help ambitious businesses realise their growth potential.
“We know the general market outlook in Scotland, and indeed globally, continues to be challenging.
“However, despite the wider market picture, we are confident in our pipeline of deals.
‘Remarkable resilience’ among SMEs
“This is because it is built on established relationships and a deep understanding of the local SME (small and medium-sized enterprises) market, which continues to show remarkable resilience despite what is thrown at it.
“The variety of success stories we had in 2023 underlines this.”
BGF achieved B Corp status last year, with the investor saying this further bolstered its “long-standing commitment to creating a positive impact both within the organisation and across the wider economy”.
Backed by some of the UK’s largest banks, BGF – formerly the Business Growth Fund – invests in small and mid-sized businesses in the UK and Ireland.
It was launched in 2011 and has to date invested £3.9 billion in more than 560 companies, making it the most active growth capital investor either side of the Irish Sea.
As a non-controlling equity partner in businesses, it adopts a patient outlook on investments – based on shared long-term goals with the management teams it backs.
BGF’s Scottish portfolio now ranges from companies specialising in precision manufacturing, to healthcare and technology, through to luxury handbags and a market-leading pet food brand.
Conversation