BGF posts strong 2019 annual results
BGF reported strong investment and financial performance in its 2019 Annual Report and Accounts, published today. BGF remained the number one growth capital investor in the world by number of transactions in 2019, despite the ongoing economic uncertainty which impacted overall entrepreneurial confidence in the UK.
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2019 highlights include:
Surpassed the £2bn investment milestone: BGF reached the £2bn invested milestone and surpassed 300 companies backed in total. Against the backdrop of ongoing Brexit uncertainty, BGF continued to remain very active in 2019 investing more than £200m in 45 new portfolio companies and providing a further £144m in follow-on funding across 67 investee businesses. BGF’s evergreen funding model, which sees it recycle proceeds and provide follow on capital to its portfolio, is now a well proven model to deliver patient capital at scale.
2nd most active investor in life sciences: BGF continued to extend its focus on earlier stage companies beyond London, leveraging its national footprint and providing much needed regional coverage. In just over a year, BGF has become the second most active investor in life sciences, making five new investments in the sector in 2019. Since 2011, BGF has invested £900m across the UK Grand Challenges set out in the Government’s Industrial Strategy including Future of Mobility, Ageing Society, Clean Growth, AI and Data Analysis.
Consolidated leading position on AIM: BGF was the largest small cap investor in the UK in the sub £100m market cap sector. It is poised to grow significantly as one of the few major and active sources of funding dedicated to the micro-cap market. The growth of BGF’s quoted portfolio continues to contribute to BGF’s large and diversified portfolio overall.
Surpassed £100m profit milestone: BGF delivered strong results in 2019, driven by its financial model which includes a broad spread of income, with dividends, interest and fees, well controlled costs, and the potential for capital upside on exits. Building a diversified portfolio. BGF maintained a robust balance sheet, with total net assets of £1.8bn (2018 £1.5bn) alongside capital and reserves of £1.6bn (2018 £1.5bn). The Group made a year-end operating profit of £133m reflecting ongoing growth in its underlying portfolio.
This is a pleasing result, however, as a long term investor BGF recognises that the valuation of the portfolio represents an assessment at a single moment in time and therefore will be impacted by the wider market conditions at the point of that assessment, as seen in 2018 and now looking immediately ahead. Covid-19 will likely result in a material short term movement in the value of the portfolio in 2020, but equally present many new situations to continue investing as part of our long-term focus. Over time this approach helps to smooth more immediate volatility whilst generating good overall returns. The key driver of BGF’s performance continues to be net realised gains achieved on exit, as opposed to interim valuation movements.
Stephen Welton, CEO, BGF said: “2019 was a strong year for BGF in terms of investment activity, continued diversification of the portfolio, and financial performance. While the entrepreneurial community at large suffered as a result of Brexit uncertainty, BGF was able to demonstrate the robustness and uniqueness of its model – through a well-capitalised and permanent balance sheet able to withstand unfavourable market conditions.
Established as a regional and delegated investment platform from the outset, BGF has taken the necessary measures to ensure business continuity, thanks to the collective efforts of its team and the breadth and scale of its platform. Looking ahead, BGF will continue to focus on:
Prioritising staff wellbeing: BGF has activated remote working to help safeguard the wellbeing of its team and continues to provide whatever support is needed. In recognition of the importance of the mental, emotional, and physical wellbeing, BGF has brought forward its annual Atlas Go! Challenge to May. The one-month challenge will engage more than 170 employees across BGF to take part in their daily exercise, from running and walking, to meditation and yoga. Volunteering will also be a central part of the challenge.
Supporting local communities with £100,000 in response to Covid-19: BGF will make donations totalling £100,000 to support local community-based charities across the UK & Ireland following the onset of Coronavirus. As a regional business active in different local economies, BGF recognises the need for increased support to local charities, many of whom are operating without the safety nets of their broader networks. It is estimated that fundraising for UK charities may fall as much as 40% in 2020.
Supporting the portfolio: As a minority shareholder in the businesses it backs, BGF has a vested interest strongly aligned in the success of portfolio companies. BGF’s regional model has enabled close working relationships with founders and management teams, and we continue to use our platform and network to help companies understand the best current view of operations, leveraging our broader stakeholder base where possible on their behalf.
Investing throughout the pandemic and beyond: Despite the lingering fallout from 2008, several years of Brexit uncertainty and now Covid-19, BGF has proven a considerable demand for its investments, having identified a gap far bigger than anticipated and so catalysed a whole ecosystem. BGF’s mission is to keep growing to fill that gap, helping more companies and attracting new sources of capital to power the engine of the UK economy. With significant economic challenges ahead BGF is willing and able to do more.
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