Changes will bring more focus
SIB streamlines funds to focus on growth firms
The Scottish Investment Bank (SIB), Scottish Enterprise’s investment arm, has relaunched its funds in order to make them more flexible and provide greater opportunities for both growth companies and investors.
It will streamline its £75 million of co-investment funds from four to two in order to more closely focus on those it is trying to help.
Investment from the SCF will range from £10,000 to £1.5 million and up to £23m through the SVF in deal sizes up to £10m.
The difference between the two funds is in the role of the private sector investor.
Investment through the SCF is alongside accredited partners who are experienced investors, vetted by SIB, and subject to the terms of the SCF partner agreement.
Following successful accreditation, the investment partner can lead multiple investment deals alongside SIB, with fast track access to matched funding across a wide investment range into eligible deals.
Investment through the SVF does not require an accredited partner. This approach makes it more accessible to a wider range of private sector investors, unlocking more risk capital funding for businesses.
New private equity market data collected for the Department of Business, Innovation and Skills found that equity investments in SMEs increased from £1 billion in 2010 to £1.6bn in 2013 due to strong seed activity.
This trend is echoed in Scotland, increasing from £116m in 2012 to £244m in 2014 (more than doubling over the two year period).
According to Scottish Enterprise this shows strong evidence of the increasing demand for equity finance and SIB’s role in facilitating access to finance for Scotland’s ambitious companies.
Kerry Sharp (pictured), head of the Scottish Investment Bank, said: “We’ve been monitoring the market and listening to our investors, and the message was clear that companies increasingly need funding to be more flexible than ever before.
“That’s why we’ve widened the investment parameters and simplified the criteria to benefit both the private sector investors we work with and the companies we invest in. This greater flexibility to invest across a broader range of businesses will enable us to support more companies to reach their full potential, which in turn helps the Scottish economy to grow.”
John Waddell, chief executive of Archangel Investors, said: “The relationship we have built with the Scottish Investment Bank since the co-investment model launched 12 years ago is one of trust and confidence.
“They have acted as the link between public and private sector funding to find solutions for Scottish SMEs in order to help them grow and move forward. This strong mutual understanding between SIB and private sector investors on what is needed to deliver a track record of success is the foundation of the co-investment model.”
Isle of Harris Distillers is a company that has previously secured co-investment funding. Ron MacEachran, Director, Isle of Harris Distillers, said: “Our project has benefited from the interest Scottish Investment Bank showed from the start of the fundraising process.
“Individual investors had increased confidence as a result, enabling us to leverage £5.65m in private sector investment. SIB also helped us align the economic and commercial impact objectives of the project’s equity investors and grant funders.
“It further helped us identify professionals with the relevant knowledge and expertise needed at critical points in the project. It’s been decades since this level of investment has come to the Isle of Harris and we are looking forward to the next chapter in this exciting opportunity.”
See Kerry Sharp, Head of the Scottish Investment Bank discussing the changes here https://www.youtube.com/watch?v=GOoaJ2SpeGI