Business Growth Fund

In July 2010 the chief executives of some of the largest banks and the British Bankers’ Association (BBA) set up a Business Finance Taskforce to consider what more could be done to help the UK return to sustainable growth. The initiative followed publication of the government's green paper, 'Financing a private sector recovery' in July 2010.

The Taskforce was particularly keen to help smaller and medium-sized businesses. Taskforce members also considered the likely macroeconomic challenges over the next two to three years and reviewed measures to ease pressures on the availability and cost of wholesale funding so that banks can provide as much support as possible to the UK’s economic recovery.

The Taskforce is made up of CEOs and senior representatives from the largest UK banks including Barclays, HSBC, Lloyds, RBS, Standard Chartered and the BBA.

The Taskforce published its report and recommendations in October 2010 covering three main areas:

Improving customer relationships
Ensuring better access to finance; and
Providing better information and promote understanding of finance.
BGF (Business Growth Fund) is one the key recommendations of the Business Finance Taskforce. In order to get BGF up and running quickly the Taskforce banks agreed to act as financial backers of the Fund, providing up to £2.5 billion to help BGF begin investing in suitable businesses.

Work to set up BGF began in October 2010 through a Working Group with membership from all the banks led by HSBC. BGF became operational in April 2011. As an independent company, BGF’s investment decisions will not be influenced by the banks or government. Representing a major new initiative, no other comparable organisation exists in the UK for this kind of funding.

Business Growth Fund will:

Invest around £2 million to £10 million in return for an equity stake in the business and a seat on the board
Invest in established UK companies that can demonstrate a strong growth trajectory
Have enough capital and resources at hand to move very quickly for the right opportunities
Offer longer-term funding over five to seven years or more, investing off its own balance sheet
Develop a partnership approach with investee businesses, agreeing shared goals and objectives from the outset
Look for businesses with evidence of a strong track record and demonstrable growth potential
Carry out targeted due diligence in a cost-effective and timely manner; and
Consider investment opportunities and businesses in all sectors apart from financial services and real estate.

Interested in learning contact Anthony at our Devizes office for more information and an introduction to BGF.