You may have missed it, but Tuesday the 11th of June was a very auspicious day for business here.
That morning, in the very pleasant surroundings of Niall and Joanne McKenna’s Waterman House, the team from Whiterock, our biggest and most successful home-grown fund management company, launched its £75 million Growth Capital Fund.
It was significant because the Growth Capital Fund is by far and away the largest, home grown, private equity fund ever launched here.
Before I go any further, there might be some reading this who don’t know what private equity is. Put simply, it’s money invested in a company in return for shareholding, known in this case as ‘equity’. The private element in the title relates to the source of the money – in this case, a group of individuals and organisations who have put their faith in the Whiterock team to manage their investments.
The fund also contains £45m of British Business Bank (BBB) money. The BBB is the UK government’s economic development bank aimed at boosting SMEs through funds like Whiterock’s Growth Capital Fund. There are many reasons why a company owner would want to use private equity instead of, for instance, bank debt or the company’s or owner’s own cash reserves, but as a form of funding for business here, it is growing quickly. Last year, according to Catalyst, over £140m of private equity was invested in companies here.
Whiterock, led by chief executive Paul Millar, expects to make investments of between £1m and £5m for minority shareholdings in growth and scaling companies, with capacity for further investments, as required. The fund will invest in businesses across a range of sectors which have strong management teams, a proven business model and high growth potential.
It really is a shot in the arm for the economy here, and what I like very much about Whiterock is the team – a bunch of hard-working, fun-loving men and women who have a developed a great company culture and probably an unparalleled knowledge of the best companies here, because they have provided £125m in debt to over 180 local SMEs, over the last 10 years.
Of course they are not the only private equity firm here. Another one with a great team and a brilliant company culture is BGF, a fund created the UK’s main banks. BGF opened in Belfast in 2015 and to date, has invested in eight companies here totalling £75m of investment, with at least another £25m to come in the next year.
In the last 18 months, BGF has also successfully exited from its two portfolio companies – waste management company RiverRidge and kitchen furniture manufacturer Uform – both delivering big returns for all shareholders. That sends such a good message about our economy and the quality of the companies here, and no doubt has been helpful to Whiterock in finding its investors.
One of the greatest company examples of private equity acceleration here has been led by my fellow Saffron Business Forum committee member Dominic Kearns. He is from the village of Dunloy, where some sort of entrepreneurial super-vitamins must be in the water given that Brendan Mooney from Kainos plc, the McKeague family from Creagh Concrete and our chairman, Tony Shivers from Premier Electrics (to name but a few), all either come from there or live there. The hurling team isn’t bad either.
Two of the companies Dominic has co-founded, Weev and Fibrus, have taken in over £200m of private equity. That sort of investment, alongside, for instance, the additional £300m from government which came in when Fibrus won the Stratum rural broadband contract and its equivalent in Cumbria means that real scale can be built in very quick time. Fibrus is currently closing in on 100,000 customers. That’s some going in only five years of business.
With £75m of new money now available through the Whiterock fund, plus BGF’s hard work to build the market here, alongside other local funds like Cordovan and Beltrae, the private equity landscape here is changing rapidly, and that will only accelerate economic growth and deliver better paid jobs in particular.
Meantime, I’m heading to Dunloy to drink the water and write-up a new business plan. Have a great summer.
- Paul McErlean is managing director of Cavendish Ireland.
