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BGF invests over £380 million in UK growth businesses in 2020

BGF News 28.01.2021.

BGF backed 61 new companies in 2020 whilst continuing to actively support its portfolio. During this period, total investment stands at £384 million, which includes £262 million into new portfolio companies and £122 million into existing portfolio companies.

Notwithstanding the global pandemic and associated recession in the UK causing unprecedented uncertainty for business, BGF broke its investment levels from the previous year and continued to show leadership and support for the UK’s growth economy, backing one new company a week.

Highlights from BGF’s regional offices in 2020 included the following:

  • The investment team for Scotland and Northern Ireland delivered a cornerstone investment in Calnex, Scotland’s first IPO for two years, invested £37 million in over 12 growth businesses, including Decora a leading manufacturing business in Northern Ireland, and completed the partial and very successful exit of one of its longest-standing and high growth technology portfolio companies, M2 Lasers.
  • BGF’s Midlands team completed 14 deals in 2020. From ceramics makers to green tech pioneers. It also completed the successful exit of premium spirits maker Chase Distillery to Diageo.
  • BGF’s team covering Leeds and Newcastle invested more than £40 million in a range of growth companies including an optician’s chain with nationwide ambitions, a digital transport system company used by NHS England, and the leading wildlife park in the region, despite the short-term challenges in the leisure sector, amongst others.
  • BGF’s North West team welcomed seven businesses to the BGF portfolio in 2020, and successfully exited three businesses including the highly successful web hosting platform Miss Group. Meanwhile, it continued to support existing portfolio companies in the region, bringing total investment to £34 million.
  • BGF’s teams in London and the South East invested a total of £111 million in 2020, with a particular focus on life sciences (where BGF is now the leading sector investor), creative industries, social media, tech, and sustainability, which is an increasing focus nationwide.
  • BGF’s teams in the South West and Wales invested a total of £67 million in a range of businesses including XCD, an HR software company in Bristol; leading autonomous vehicle company Oxbotica and a £6 million investment in Cardiff-headquartered Kagool.

Stephen Welton, Executive Chairman at BGF said: “2020 is a year we won’t forget in a hurry. Despite the economic uncertainty of the last 12 months, we have maintained robust levels of investment throughout the UK as we look to invest through the cycle and ensure we keep supporting growth companies, not just in good times, but at all times. Many businesses have had to pivot during the last 12 months and we’re no exception. We’ve successfully switched to remote working, embraced the power of technology to increase collaboration, and have completed a number of deals, such as 365 Response in Wakefield and Datum360 in Teesside that originated and completed during lockdown. We start 2021 with renewed vigour recognising the ongoing challenges of the pandemic but determined to support the UK’s growth economy by delivering the funds that these ambitious businesses need to flourish.”

BGF delivered 20 successful exits in 2020 with an average money multiple of 1.9x and an aggregate IRR of 26%. The average investment hold period was 3.5 years and ranged from nine months to over six years, facilitated by BGF’s flexible investment model. These exits – which returned over £220 million from the £117 million invested – included M Squared, Miss Group and AIM-listed Castleton.

Technology and digital companies made up a significant portion of investments in the last 12 months, while BGF also saw a significant number of deals completed in the fields of life sciences and cleantech.

2020 was clearly a difficult year for the economy overall and for some businesses overwhelming, which is why as an investor BGF continued to maintain a broad risk appetite to keep supporting those who drive innovation, wealth creation and GDP growth. With an ability to deploy capital based on longer-term investment horizons, BGF’s continues to back companies across a diverse range of sectors, for example City Pubs Group, which owns and operates an estate of premium pubs across the southern half of England and Wales.

Other highlights in the portfolio this year saw Gousto – the recipe box subscription service – achieve Unicorn status after BGF closed its eighth funding round in the business having first supported the company back in 2015.

Andy Gregory, Head of Investments – UK & Ireland, BGF said: “2020 has undoubtedly been tough for the growth economy however we have been impressed by the resilience and determination shown by our portfolio companies and new investments. A recent BGF survey showed that 75% of companies remain motivated to grow their business in 2021, despite the challenges of Covid and Brexit.

“Looking ahead to new investments, we are seeing significant activity from business owners who are considering their future options and looking for an experienced, influential investment partner with a long-term outlook and the ability to be flexible.”

Stephen Welton, Executive Chairman of BGF continued: “We look forward to realising the growth ambitions of new and existing portfolio companies in 2021 and to supporting fast growing companies in emerging new sectors. Not least because this year will see BGF celebrate its 10th anniversary having broken the £2.5 billion investment mark and supported nearly 400 companies in the UK since our launch.

“Through our proposition of long-term, minority equity capital combined with the UK’s largest network of non-executive talent, we are in a key position to be driving growth at a crucial time for the economy. We were born out of the last recession and times like these really exemplify our ambition to do more and increase our own scale. BGF is leading calls for a truly nationwide investment focus from all the major funding institutions to increase the supply of equity capital to the Growth Economy, which is the only way we will make a reality of Levelling Up”