The Press and Journal (Inverness, Highlands, and Islands)

Major north-east deals part of another busy year at BGF

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.

So, what exactly is BGF? One of the largest growth capital investors in the UK and Ireland, BGF’s 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-doingbusin­ess 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 £4.5m for Stellar Omada – a fast-growing Edinburghh­eadquarter­ed technology services company – and £2m into STC Insiso, an Aberdeenhe­adquartere­d 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 multimilli­on-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 (rebranded to Hyble), a leading provider of marketing technology to the global drink and hospitalit­y sector.

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.

BGF invested a total of £16 million in the company between 2012 and 2023, helping it expand its internatio­nal footprint and invest in people and product. The investment helped drive spectacula­r growth and, as a result, the business more than quadrupled revenues and is said to have generated a “very healthy return” for stakeholde­rs on exit.

BGF added that its exit from Bellshillh­eadquarter­ed Kick ICT completed during the

second half of 2023 and delivered a strong internal rate of return of 38%.

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 have 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.”

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.

“This is because it is built on establishe­d relationsh­ips and a deep understand­ing of the local SME (small and mediumsize­d 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 that 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.