A UK venture capital fund has hired a senior executive with IBI Corporate Finance, Leo Casey, to spearhead its aim to invest €200 million in SMEs in Ireland.
Mr Casey, who has been with IBI, a unit of Bank of Ireland, for the past 17 years, is set to join Business Growth Fund (BGF) later this year to develop its Irish business, taking long-term minority stakes in family-owned or entrepreneur-led businesses.
The UK firm was set up in 2011 by five of the country's main banks – Barclays, HSBC, Lloyds Banking Group, Royal Bank of Scotland and Standard Chartered – in the wake of the financial crisis as an independent company to make up to £2.5 billion (€2.9 billion) of equity investments in SMEs.
Unlike private equity firms, which typically seek a controlling stake in a business, and an exit within five to seven years, BGF’s so-called “patient capital” model permits long-term investments.
“Irish SMEs need access to more patient sources of funding to support growth,” said Mr Casey, who will head up the UK firm’s new Irish business from September.
‘Minority partnership’
BGF’s “model of investing combines long-term funding with a minority partnership, which is particularly attractive to entrepreneurs who do not want to lose control of their business”.
While Mr Casey declined to say how large the Irish fund would be, it has previously been reported that BGF would seek to invest €200 million.
It is understood that the State's Ireland Strategic Investment Fund (ISIF), AIB, Bank of Ireland and Ulster Bank will provide capital to the fund.
ISIF, a successor to the National Pension Reserve Fund, already backs a number of entities that provide equity and debt financing to Irish SMEs.
Earlier this year, BGF invested €5.8 million in Renegade Spirits Ireland, a whiskey distillery in Waterford, and co-invested with State-owned forestry company Coillte’s MDF unit to fund a woodchip factory.
In February, Dublin-listed financial software and consultancy group First Derivatives entered a partnership with BGF to use the Northern Ireland company’s high-performance database to “turn bright ideas into disruptive companies” across different sectors.
Fledgling companies
The aim is to combine First Derivatives’ technology and BGF’s balance sheet to develop fledgling companies in areas such as cyber security, robotics, life sciences and nanotechnology. It would help First Derivatives, which was set up 21 years ago, expand the application of its technology beyond its historic base among Wall Street banks.
"We recognise the significant opportunity to help more of Ireland's ambitious smaller and mid-sized companies become bigger businesses and, in turn, encourage greater economic activity," said Stephen Welton, chief executive of BGF, adding that it is a "timely moment to forge stronger trade links" between Ireland and UK companies, even as Brexit threatens to impact trade between both countries.
Before joining IBI, Mr Casey worked at Dresdner Kleinwort Benson in Paris, and began his career with PwC in Dublin.
