Investment body looks to Aberdeen

THE Business Growth Fund (BGF), the £2.5 billion body set up by the big five banks to take equity stakes in fast-growing firms, will next month open a branch in Aberdeen to target the oil and gas sector.

Simon Munro, the BGF’s Scottish director, told Scotland on Sunday that he will be recruiting a director and two investment managers with experience in the energy industry.

The office will be in addition to the existing site in Edinburgh, where Munro is about to appoint two investment managers.

Munro said: “Although the staff will be based in Scotland, they will also get involved in scrutinising candidates for investment across the UK.

“It’s important that our investment managers are tuned in to how the fund will operate across the UK.”

The BGF was launched earlier this year by Barclays, HSBC, Lloyds Banking Group, Royal Bank of Scotland and Standard Chartered, with coordination from the British Bankers’ Association trade body.

Instead of providing debt to companies, the fund will invest between £2 million and £10m in exchange for a minimum equity stake of 10 per cent and a seat on the board.

Firms that turn over between £5m and £50m will be considered for funding.

Munro said he expects the fund to make its first investment in a Scottish firm in January, with the number of potential deals passing across his desk rising in recent weeks.

He said the fund would initially invest in between 30 and 40 firms a year throughout the UK, including about six to eight in Scotland, before ramping up the number of investments it makes.

“We’re here to be a long-term investor,” Munro added. “While private equity companies may be looking for an exit over a three to five-year period, we will be much more comfortable operating over a five to ten-year timescale.”

Munro – who was previously a managing director at Lime Rock Partners, a private equity investor in the oil and gas sector – said any profits made when the fund sells its stake in its investments, whether back to existing management teams or on to trade buyers if a company is sold, would be reinvested into the fund.