Major investor BGF bullish regarding Scottish portfolio after buoyant H1

BGF, which says it is the UK and Ireland’s most active investor, has highlighted strong deal flow in Scotland in the first half of 2022, with four successful exits.

The organisation, formerly known as Business Growth Fund, explains that it is a long-term patient investor, aiming to “inspire a generation of entrepreneurs largely overlooked or insufficiently supported by the investment community”, making initial investments of £1 million to £15m for a minority equity stake.

It said close to £25m has been invested into growing businesses in Scotland and Northern Ireland in the first half, while exit activity has delivered a 3.5-time return from four exits.

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BGF said relevant deals completed so far in 2022 come from a range of sectors, including life sciences, technology, manufacturing and healthcare, with a broad geographical spread across Scotland while two of the three businesses have female founders.

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It added that since the turn of the year, it has completed a £1.6m investment in Inverness medtech firm Aiber, while Glasgow-headquartered Scottish Dental Care received a multi-million-pound minority investment to implement its ambitious growth plans. Additionally, BGF led an £8m investment round into Aberdeen-based biopharmaceutical company Elasmogen to support its development pipeline of next-generation drugs.

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BGF added that as its Scottish portfolio continues to mature, there have been four exits/partial exits in the first half of the year, with a combined enterprise value of more than £260m. These exits, which follow hold periods ranging from 18 months to nine years, have returned £63m to BGF on £18m invested. They include CSN Care Group, Inoapps, Aubin, and a partial exit from Calnex.

Patrick Graham, BGF’s head of Scotland and Northern Ireland, said: “After a record 2021, where BGF’s Scotland and Northern Ireland team invested almost £60m, it is particularly pleasing to see this momentum continued through a diverse range of significant deals.

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'The pipeline for the remainder of the year is strong, with more new deals and further positive exits anticipated,' says Patrick Graham, BGF’s head of Scotland and Northern Ireland. Picture: Lisa Ferguson.

"As businesses adapt to higher inflation and the lingering aftermath of the Covid-19 pandemic, our ability to deploy capital at scale, and the overall strength of our investment model continues to attract the type of ambitious companies we seek to support.

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Journey

“As well as new investments, we also recorded four successful Scottish exits, which serve as a reminder of the important journey we go on with our portfolio companies as they scale. Each exit marked a mutually beneficial next step following positive work between BGF and the investee company. Looking ahead, the pipeline for the remainder of the year is strong, with more new deals and further positive exits anticipated.”

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BGF said its existing portfolio companies in Scotland also continued to perform well in the first half of 2022. Dundee tech firm Waracle saw its sales increase by nearly £12m, Paint Shed opened its 18th store in March, with another to follow soon, and independent coffee and food chain Bob & Berts is opening its sixth Scottish site at the end of July, with further expansion expected. More recently, Scottish Dental Care used BGF funding to help buy two Edinburgh practices.

This news comes hot on the heels of the publication of annual results for BGF in the UK and Ireland that marked a “record-breaking” 2021 for the organisation, during which it backed 67 new companies, investing £600m altogether. Since 2012 it has provided more than £350m in funding for businesses across Scotland.