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DEBT AND EQUITY FINANCE IN THE SOUTH WEST – THE
OPTIONS EXPLORED
Gavin Poole, partner
Programme

•   Welcome

•   Introductions

•   Speakers

•   Q&A

•   Networking and refreshments

•   Close
Supporting the Institute of Directors

•   South West region:

     • Bath, Wiltshire, Bristol, Devon, Cornwall, Dorset, Gloucestershire and Somerset

     • IoD South West Director of the Year Awards: closing date: 30th March 2012

     • Next events:
          •   meet Simon Walker (IoD Director General)
          •   visit to Honda car and engine factory
          •   successful women in business
          •   networking events


     • See IoD website for further details
Premier South West Law firm

Legal Week Regional Law Firm of the Year 2011

Nationally recognised for our sector expertise

Depth and breadth of capability in over 25 areas of law

Over 350 staff including 250 lawyers and 52 partners

Offices in Truro, Plymouth, Exeter, Taunton, Bristol
Context
•   The London Stock Exchange
     •   Main exchange
           • 2010: 89 new admissions. £10bn raised
           • 2011: 76 new admissions. £12.9bn raised
     •   AIM
           • 2010: 43 new admissions. £6bn raised
           • 2011: 45 new admissions. £3.8bn raised

•   Western Morning News deals review 2010-11
     •   ↓ Equity deals
     •   ↓ Deal values
     •   ↑ Bank funded deals
     •   ↑ Exits by investors
     •   ↑ Expectation of equity backed deals in 2012
•   New entrants
     •   Peer-to-peer – Crowd – Grant – Banks – and more
     •   Overseas
•   Increasingly complex landscapes and matrices
Our speakers

•   Richard Davis
     • Senior manager
     • Devon and Cornwall
     • Lloyds TSB Commercial

•   Bruce Colley
     • Consultant
     • Pegasus Funding Resources

•   Paul Oldham
     • Regional director
     • South West and South Wales
     • Business Growth Fund plc
Debt Finance

                    Richard Davis
        Senior Manager - Lloyds TSB Commercial



IoD Devon & Cornwall - Foot Anstey seminar 28th March 2012
Wide range of financing options

   Overdrafts         Business                Term
                       Growth                 Loans
                       Fund




         Loan                      Business
      Guarantee                     Angels
      s Schemes


                   Asset                         Regional
                  Finance                         Growth
                                                  Fund
     Invoice
    Discountin                   Crowd
       g&                        Cube
    Factoring

                                                            8
The right mix of options
For example ;




   Asset Finance          Invoice         Term Loans
                       Discounting &
                         Factoring




                   Business Growth Fund




                                                       9
BUT



For a business the best form of finance
to support growth by far is ;




                                          10
The right mix of options

                           Invoice
  Asset Finance         Discounting &      Term Loans
                          Factoring




                    Business Growth Fund




                  RETAINED PROFITS

                                                        11
Debt Finance

The lending story;

Advantages / disadvantages
• Types of debt finance:
          - General
          - Specialist
• Costs including NLGS
Debt Finance

• General debt finance:
          - Loan
          - Overdraft
          - Invoice financing
          - Asset Finance
• Specialist schemes – e.g. EFG, Export
  finance
Advantages of debt compared
to equity
• Generally cheaper and usually less complicated


• The owner's ownership interest in the company is not diluted


• A lender has no direct claim on future profits of the business


• Repayments can be forecasted and planned for


• Interest tax deductible
Disadvantages of debt compared
to equity

 • Loan debt must be repaid on terms agreed at the outset
   rather than performance related


 • Cash requirement may restrict investment


 •   Weakens rather than strengthens Company balance sheet


 • Security required which may involve personal assets pledged
   as collateral
The right mix of options

                         Invoice
  Asset Finance       Discounting &      Term Loans
                        Factoring




                  Business Growth Fund




                  RETAINED PROFITS !!!



                                                      16
Enterprise Finance Guarantee
Scheme


• Loan facility between £25,000 and £1m.
• Up to 10 years repayment
• Must meet eligibility criteria
• Viable business proposition but lacks security (including
  personal security)
• Personal Guarantee required
• Government Guarantee for 75% of loan
Two EFG examples


• Profitable family Retail business established for over 30
  years.
• Sold to employee with £25k stake from him and EFG
  loan of £100k

• Software business developing new product
• £60k EFG loan for IT equipment and 2 new staff .
Export Finance – What’s involved

Receivables and                   Cash / Capital
Post Shipment                                               Orders from
Finance                                                     Buyers/LC.

                    Receivables              Order Goods
                                                            Import/Pre-
                                                            Shipment
                                                            Finance

                   Delivery/Shipment
                                            Receive Goods
                   of Goods
                                                           Import/Pre-
Letter of Credit                                           Shipment Loan
- Pre-Shipment
Finance
Import finance – an example

• Wholesale & retailer of stationary
• Funding through CID line – including export lines
• New large order received from major retailer
• Goods sourced from suppliers in Far East
• Suppliers require payment when goods on water
• Additional $320K required – but current facilities fully
  utilised
• CID funding only available when goods delivered and
  invoice raised
Import finance – an example
           (cont)

• Seller sends documentary collection to LTSB
• As goods ‘pre-sold’ we pay collection using Import Loan
  and release documents to customer against Trust
  Receipt
• Goods cleared & delivered to end buyer
• Invoice raised and discounted – proceeds repay Import
  Loan
• Works from the Bank’s point of view because we control
  the payment to supplier and retain ownership of stock
  until purchased .
Supporting trade through
         government schemes
Designed to help exporters with their cash flow, thus enabling them to fulfil export

orders   more easily
  The UK Government’s Trade and
Investment White Paper plans to increase
Trade support

  Four schemes launched so far:

     ECGD Letter of Credit Guarantee
      Scheme

     ECGD Export Working Capital Scheme

     BIS Export Enterprise Finance Guarantee
      Scheme (Ex EFG)
                                                         Your IBM has access to these
  LBG supports all these schemes                                  schemes
Cost of Debt Funding


Borrowing linked to:

• Base rate (currently 0.5%)

Or

• LIBOR ( 3 month rate currently 1.04%)
National Loan Guarantee
Scheme


• Enables participating banks to offer
  1% discount on standard interest rates for
  first 5 years of a loan
Market expects no change in
base rate until 2014
   3mth Libor %
    7


    6


    5


    4


    3
                                                                  LBCM Forecast

    2


    1                                                                    Market
                                                                        Forecast
    0
     2008            2009            2010   2011   2012   2013   2014




Source: Bloomberg & LBWBM Research
National Loan Guarantee
Scheme


• Enables participating banks to offer
  1% discount on standard interest rates for
  1st 5 years of a loan

• Why is it needed ?
Banks wholesale funding costs
  have risen as money markets
  have tightened
    UK banks 5-yr term funding costs (%)
    9

    8
                                                      UK Bank CDS spread
    7                                                 3mth Libor spread
                                                      UK Bank Rate
    6

    5

    4

    3

    2

    1

    0
     2005             2006            2007   2008   2009         2010      2011



Source: Bloomberg & LBWBM Research
NLGS loans - key details

• Min £25k    Max £5m
• 1 to 25 years
• Must be in UK and not for Export only
• Counts as state aid under EC rules so:
  - Some sector exclusions e.g. Road Haulage
  - Total benefits provided by discount plus any other State Aid
     being received must not exceed EC thresholds
  - Customers with a current EFG loan excluded
• Subject to above 1% discount applies for 5 years, then
  interest rate reverts to standard.
Summary


• Debt finance plays a key role

• Right type of finance for the right purpose

• Getting the mix of finance right is
  important
“Mind the gap”
                    Alternative funding

                       Bruce Colley
                      28th March 2012


© Pegasus Funding
Resources
The context
                      (Lending)




© Pegasus Funding
Resources
The context
                    (Median interest rates)




© Pegasus Funding
Resources
Last 12 Months Lending Picture
•   Commercial Mortgages                   +6.3%
•   Asset Finance                          +3.5%
•   Invoice Finance                        +6.6%
•   Buy to Let                             +46%
•   Property Development Loans             +108%
•   Vehicle Finance                        -68%
•   All Other Lending                      +14.7%
    But wider type & variety of lenders and types of lending
•   Source NACFB




© Pegasus Funding
Resources
Sources of finance
                                           (High street banks)




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                                                                                                            Fa
              FFF                                           
              Personal mortgages                            
              Grants                                        
              Regional loans                                 
              Commercial mortgages                                             
              Bank EFG                                                        
              Bank overdraft                                                   
              Bank commercial loan                                                       
              Leasing / HP                                                                       
              Factoring                                                                                       
              Confidential invoice discounting                                                                 
              Single invoice discounting                                                
              Trade finance                                                    
              Money with Management                                           
              Re-financing of assets                                                               
              Angels                                                                   
              VCs                                                                        
              Recovery angels                                                                                     
© Pegasus Funding
Resources
Sources of finance
                                (off high street banks)




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                                                                                                           Fa
             FFF                                           
             Personal mortgages                            
             Grants                                        
             Regional loans                                 
             Commercial mortgages                                             
             Bank EFG                                                        
             Bank overdraft                                                   
             Bank commercial loan                                                       
             Leasing / HP                                                                       
             Factoring                                                                                       
             Confidential invoice discounting                                                                 
             Single invoice discounting                                                
             Trade finance                                                    
             Money with Management                                           
             Re-financing of assets                                                               
             Angels                                                                   
             VCs                                                                        
             Recovery angels                                                                                     
© Pegasus Funding
Resources
Sources of finance
                                 (specialist providers)




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                                                                                                             Fa
               FFF                                           
               Personal mortgages                            
               Grants                                        
               Regional loans                                 
               Commercial mortgages                                             
               Bank EFG                                                        
               Bank overdraft                                                   
               Bank commercial loan                                                       
               Leasing / HP                                                                       
               Factoring                                                                                      
               Confidential invoice discounting                                                                
               Single invoice discounting                                                
               Trade finance                                                    
               Money with Management                                           
               Re-financing of assets                                                               
               Angels                                                                   
               VCs                                                                        
               Recovery angels                                                                                    
© Pegasus Funding
Resources
Angel networks (some examples)
•   Pegasus – Highly selective (introduce 15 to 20 per year) – No
    events – Prefer trading businesses - £100K to £750K – tend not to
    be informal syndicates – assist with IR - side with the company
•   SWAIN – Greater emphasis on startup – Event focussed – lower
    deal size – average £50K to £150K
•   Beers – Largest angel capacity – high up front charges – higher
    success fees
•   Beer & Young – Turnaround network – work closely with Pegasus
•   Crowdcube – Crowd funding – large number of small investors (not
    self-certificated) – seen by wide range of people (so highly
    confidential businesses may have an issue) – compromises existing
    EIS investors – work closely with Pegasus
•   All excluding Beers work on a 5% success fee

© Pegasus Funding
Resources
Debtors paying   Cannot fund   Cannot pay VAT    General cash No cash to grow Cannot buy new                    No funds for   No funds for   Company in
                                                                                                                            Loss of credit
                                  late        new orders       or PAYE       flow problems    business       technology                       start-up      acquisitions     decline


FFF
                                                                                                                                                                            
Personal mortgages
                                                                                                                                             
Regional loans
                                                                                                                                                               
Commercial mortgages
                                                                                                                                                               
Bank EFG
                                                                                                                            
Bank overdraft
                                                                                                                                                           
Bank commercial loan
                                                                                                                                                           
Leasing / HP
                                                                                                              
Factoring
                                                                                                                                                                    
invoice discounting
                                                                                                                                                                    
Single invoice discounting
                                                                                                                                                                    
Trade finance
                                                                                              
Stock Finance
                                                                                              
Recruitment of Non-Exec
                                                                                                                                                                        
Re-financing of assets
                                                                                                                                                                      
Angels
                                                                                                                                                             
VCs
                                                                                                                                                               
Recovery angels
                                                                                                                                                                             
         © Pegasus Funding
         Resources
Contact Details:

                   Bruce Colley: 07730 029594
               bruce.colley@pegasusfunding.co.uk .




© Pegasus Funding
Resources
www.businessgrowthfund.co.uk




Introduction to
Business Growth Fund
Paul Oldham
Regional Director
South West and South Wales
An exciting and bold initiative to invest growth capital in UK
     companies as we come out of recession

•    Established by five of the largest UK banks with £2.5bn of capital

•    Focuses on growth and expansion funding for UK companies

•    Long-term business builder through expertise as well as capital

•    Independent, quick and autonomous decision making

•    60+ staff, 6 regional offices, local deal origination, execution and
     support



41
Locations
 •    The BGF is a national organisation with a regional network of offices
      to drive local deal origination, execution and on-going support

        Aberdeen Office
                                                        Edinburgh Office


     Manchester Office
                                                       Birmingham Office




         Bristol Office                               London Office




42
Investment Criteria
     •   Focus on established UK companies with sales of approximately £5m
         up to £100m
     •   Businesses with past and potential future growth
     •   Capable management team
     •   £2-10 million equity requirement
     •   Growth capital funds can be used for:
          • Acquisitions, working capital, R&D, capital investment, overseas
            expansion
          • Some “cash out” to shareholders but this must be less than 50% of the
            BGF investment

43
Sectors

     •   Generalist sector focus but heavily growth orientated

     •   Excluded sectors:
              • Some regulated financial services businesses

              • Property investment and development

              • Some on ethical grounds (e.g. gambling)

     •   Particularly interested in:
              • High-tech manufacturing, software and electronics, leisure &
                tourism, renewable energy & cleantech, healthcare & life
                sciences, industrial & business services, oil & gas,
                outsourcing, and digital businesses
44
A true partner for families, entrepreneurs and management

•    Via board membership of portfolio companies, the BGF will provide:
      – guidance on finance and capital structure
      – practical support through business partners
      – strategic growth guidance
•    Involvement at board level not day-to-day operations
•    Conservative structures not reliant on debt
•    Minority investor
•    Long-term investments with flexibility




45
The BGF will
•   Work alongside other investors
•   “Plug the gap" between Angel/VCT/Private Investors and Private
    Equity
• Exit
    Stimulate and grow demand overall for investment into UK SME’s

                                                                 Private
                                                                 Equity
 Grow
                                  Venture
                                  Capital

                      Business
                       Angels


Start-up   Friends
           & Family


             £50k                £500k       £5m          £50m        46
Why Is BGF Different?

 •   Focus on growth capital for SMEs

 •   Flexible, long-term view on exit

 •   Flexibility on investment structures – minority shareholder

 •   Regional office network

 •   Added value for investee companies

 •   Focused diligence process and sensible investment timelines


          INCREASED CHOICE FOR SMEs

47
QUESTIONS?




             ?
Next events

•   IoD Events
     • Refreshments
     • See IoD website

•   Foot Anstey events
     • City conversations: Plymouth, tomorrow morning
     • Education team seminars

•   Finance in Cornwall 2012
     • Date: 15 May 2012
     • Time: 8.30am to 2pm
     • Venue: Lighthouse Cinema, Newquay
THANK YOU
Gavin Poole, partner

Corporate team, Truro

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Io d presentation(7364080 1)

  • 1. DEBT AND EQUITY FINANCE IN THE SOUTH WEST – THE OPTIONS EXPLORED Gavin Poole, partner
  • 2. Programme • Welcome • Introductions • Speakers • Q&A • Networking and refreshments • Close
  • 3. Supporting the Institute of Directors • South West region: • Bath, Wiltshire, Bristol, Devon, Cornwall, Dorset, Gloucestershire and Somerset • IoD South West Director of the Year Awards: closing date: 30th March 2012 • Next events: • meet Simon Walker (IoD Director General) • visit to Honda car and engine factory • successful women in business • networking events • See IoD website for further details
  • 4. Premier South West Law firm Legal Week Regional Law Firm of the Year 2011 Nationally recognised for our sector expertise Depth and breadth of capability in over 25 areas of law Over 350 staff including 250 lawyers and 52 partners Offices in Truro, Plymouth, Exeter, Taunton, Bristol
  • 5. Context • The London Stock Exchange • Main exchange • 2010: 89 new admissions. £10bn raised • 2011: 76 new admissions. £12.9bn raised • AIM • 2010: 43 new admissions. £6bn raised • 2011: 45 new admissions. £3.8bn raised • Western Morning News deals review 2010-11 • ↓ Equity deals • ↓ Deal values • ↑ Bank funded deals • ↑ Exits by investors • ↑ Expectation of equity backed deals in 2012 • New entrants • Peer-to-peer – Crowd – Grant – Banks – and more • Overseas • Increasingly complex landscapes and matrices
  • 6. Our speakers • Richard Davis • Senior manager • Devon and Cornwall • Lloyds TSB Commercial • Bruce Colley • Consultant • Pegasus Funding Resources • Paul Oldham • Regional director • South West and South Wales • Business Growth Fund plc
  • 7. Debt Finance Richard Davis Senior Manager - Lloyds TSB Commercial IoD Devon & Cornwall - Foot Anstey seminar 28th March 2012
  • 8. Wide range of financing options Overdrafts Business Term Growth Loans Fund Loan Business Guarantee Angels s Schemes Asset Regional Finance Growth Fund Invoice Discountin Crowd g& Cube Factoring 8
  • 9. The right mix of options For example ; Asset Finance Invoice Term Loans Discounting & Factoring Business Growth Fund 9
  • 10. BUT For a business the best form of finance to support growth by far is ; 10
  • 11. The right mix of options Invoice Asset Finance Discounting & Term Loans Factoring Business Growth Fund RETAINED PROFITS 11
  • 12. Debt Finance The lending story; Advantages / disadvantages • Types of debt finance: - General - Specialist • Costs including NLGS
  • 13. Debt Finance • General debt finance: - Loan - Overdraft - Invoice financing - Asset Finance • Specialist schemes – e.g. EFG, Export finance
  • 14. Advantages of debt compared to equity • Generally cheaper and usually less complicated • The owner's ownership interest in the company is not diluted • A lender has no direct claim on future profits of the business • Repayments can be forecasted and planned for • Interest tax deductible
  • 15. Disadvantages of debt compared to equity • Loan debt must be repaid on terms agreed at the outset rather than performance related • Cash requirement may restrict investment • Weakens rather than strengthens Company balance sheet • Security required which may involve personal assets pledged as collateral
  • 16. The right mix of options Invoice Asset Finance Discounting & Term Loans Factoring Business Growth Fund RETAINED PROFITS !!! 16
  • 17. Enterprise Finance Guarantee Scheme • Loan facility between £25,000 and £1m. • Up to 10 years repayment • Must meet eligibility criteria • Viable business proposition but lacks security (including personal security) • Personal Guarantee required • Government Guarantee for 75% of loan
  • 18. Two EFG examples • Profitable family Retail business established for over 30 years. • Sold to employee with £25k stake from him and EFG loan of £100k • Software business developing new product • £60k EFG loan for IT equipment and 2 new staff .
  • 19. Export Finance – What’s involved Receivables and Cash / Capital Post Shipment Orders from Finance Buyers/LC. Receivables Order Goods Import/Pre- Shipment Finance Delivery/Shipment Receive Goods of Goods Import/Pre- Letter of Credit Shipment Loan - Pre-Shipment Finance
  • 20. Import finance – an example • Wholesale & retailer of stationary • Funding through CID line – including export lines • New large order received from major retailer • Goods sourced from suppliers in Far East • Suppliers require payment when goods on water • Additional $320K required – but current facilities fully utilised • CID funding only available when goods delivered and invoice raised
  • 21. Import finance – an example (cont) • Seller sends documentary collection to LTSB • As goods ‘pre-sold’ we pay collection using Import Loan and release documents to customer against Trust Receipt • Goods cleared & delivered to end buyer • Invoice raised and discounted – proceeds repay Import Loan • Works from the Bank’s point of view because we control the payment to supplier and retain ownership of stock until purchased .
  • 22. Supporting trade through government schemes Designed to help exporters with their cash flow, thus enabling them to fulfil export orders more easily The UK Government’s Trade and Investment White Paper plans to increase Trade support Four schemes launched so far:  ECGD Letter of Credit Guarantee Scheme  ECGD Export Working Capital Scheme  BIS Export Enterprise Finance Guarantee Scheme (Ex EFG) Your IBM has access to these LBG supports all these schemes schemes
  • 23. Cost of Debt Funding Borrowing linked to: • Base rate (currently 0.5%) Or • LIBOR ( 3 month rate currently 1.04%)
  • 24. National Loan Guarantee Scheme • Enables participating banks to offer 1% discount on standard interest rates for first 5 years of a loan
  • 25. Market expects no change in base rate until 2014 3mth Libor % 7 6 5 4 3 LBCM Forecast 2 1 Market Forecast 0 2008 2009 2010 2011 2012 2013 2014 Source: Bloomberg & LBWBM Research
  • 26. National Loan Guarantee Scheme • Enables participating banks to offer 1% discount on standard interest rates for 1st 5 years of a loan • Why is it needed ?
  • 27. Banks wholesale funding costs have risen as money markets have tightened UK banks 5-yr term funding costs (%) 9 8 UK Bank CDS spread 7 3mth Libor spread UK Bank Rate 6 5 4 3 2 1 0 2005 2006 2007 2008 2009 2010 2011 Source: Bloomberg & LBWBM Research
  • 28. NLGS loans - key details • Min £25k Max £5m • 1 to 25 years • Must be in UK and not for Export only • Counts as state aid under EC rules so: - Some sector exclusions e.g. Road Haulage - Total benefits provided by discount plus any other State Aid being received must not exceed EC thresholds - Customers with a current EFG loan excluded • Subject to above 1% discount applies for 5 years, then interest rate reverts to standard.
  • 29. Summary • Debt finance plays a key role • Right type of finance for the right purpose • Getting the mix of finance right is important
  • 30. “Mind the gap” Alternative funding Bruce Colley 28th March 2012 © Pegasus Funding Resources
  • 31. The context (Lending) © Pegasus Funding Resources
  • 32. The context (Median interest rates) © Pegasus Funding Resources
  • 33. Last 12 Months Lending Picture • Commercial Mortgages +6.3% • Asset Finance +3.5% • Invoice Finance +6.6% • Buy to Let +46% • Property Development Loans +108% • Vehicle Finance -68% • All Other Lending +14.7% But wider type & variety of lenders and types of lending • Source NACFB © Pegasus Funding Resources
  • 34. Sources of finance (High street banks) ix en on s o on ti Ph da ti t up re/ h ne ep oli isi wt rt- qu nc cli ns ilu o Sta De Co Co Ac Gr Fa FFF   Personal mortgages   Grants   Regional loans  Commercial mortgages   Bank EFG    Bank overdraft   Bank commercial loan    Leasing / HP      Factoring       Confidential invoice discounting      Single invoice discounting     Trade finance   Money with Management    Re-financing of assets    Angels      VCs    Recovery angels   © Pegasus Funding Resources
  • 35. Sources of finance (off high street banks) ix en on s o on ti Ph da ti t up re/ h ne ep oli isi wt rt- qu nc cli ns ilu o Sta De Co Co Ac Gr Fa FFF   Personal mortgages   Grants   Regional loans  Commercial mortgages   Bank EFG    Bank overdraft   Bank commercial loan    Leasing / HP      Factoring       Confidential invoice discounting      Single invoice discounting     Trade finance   Money with Management    Re-financing of assets    Angels      VCs    Recovery angels   © Pegasus Funding Resources
  • 36. Sources of finance (specialist providers) ix en on s o on ti Ph da ti t up re/ h ne ep oli isi wt rt- qu nc cli ns ilu o Sta De Co Co Ac Gr Fa FFF   Personal mortgages   Grants   Regional loans  Commercial mortgages   Bank EFG    Bank overdraft   Bank commercial loan    Leasing / HP      Factoring       Confidential invoice discounting      Single invoice discounting     Trade finance   Money with Management    Re-financing of assets    Angels      VCs    Recovery angels   © Pegasus Funding Resources
  • 37. Angel networks (some examples) • Pegasus – Highly selective (introduce 15 to 20 per year) – No events – Prefer trading businesses - £100K to £750K – tend not to be informal syndicates – assist with IR - side with the company • SWAIN – Greater emphasis on startup – Event focussed – lower deal size – average £50K to £150K • Beers – Largest angel capacity – high up front charges – higher success fees • Beer & Young – Turnaround network – work closely with Pegasus • Crowdcube – Crowd funding – large number of small investors (not self-certificated) – seen by wide range of people (so highly confidential businesses may have an issue) – compromises existing EIS investors – work closely with Pegasus • All excluding Beers work on a 5% success fee © Pegasus Funding Resources
  • 38. Debtors paying Cannot fund Cannot pay VAT General cash No cash to grow Cannot buy new No funds for No funds for Company in Loss of credit late new orders or PAYE flow problems business technology start-up acquisitions decline FFF   Personal mortgages     Regional loans  Commercial mortgages  Bank EFG      Bank overdraft      Bank commercial loan      Leasing / HP   Factoring           invoice discounting           Single invoice discounting           Trade finance    Stock Finance    Recruitment of Non-Exec       Re-financing of assets         Angels    VCs  Recovery angels  © Pegasus Funding Resources
  • 39. Contact Details: Bruce Colley: 07730 029594 bruce.colley@pegasusfunding.co.uk . © Pegasus Funding Resources
  • 40. www.businessgrowthfund.co.uk Introduction to Business Growth Fund Paul Oldham Regional Director South West and South Wales
  • 41. An exciting and bold initiative to invest growth capital in UK companies as we come out of recession • Established by five of the largest UK banks with £2.5bn of capital • Focuses on growth and expansion funding for UK companies • Long-term business builder through expertise as well as capital • Independent, quick and autonomous decision making • 60+ staff, 6 regional offices, local deal origination, execution and support 41
  • 42. Locations • The BGF is a national organisation with a regional network of offices to drive local deal origination, execution and on-going support Aberdeen Office Edinburgh Office Manchester Office Birmingham Office Bristol Office London Office 42
  • 43. Investment Criteria • Focus on established UK companies with sales of approximately £5m up to £100m • Businesses with past and potential future growth • Capable management team • £2-10 million equity requirement • Growth capital funds can be used for: • Acquisitions, working capital, R&D, capital investment, overseas expansion • Some “cash out” to shareholders but this must be less than 50% of the BGF investment 43
  • 44. Sectors • Generalist sector focus but heavily growth orientated • Excluded sectors: • Some regulated financial services businesses • Property investment and development • Some on ethical grounds (e.g. gambling) • Particularly interested in: • High-tech manufacturing, software and electronics, leisure & tourism, renewable energy & cleantech, healthcare & life sciences, industrial & business services, oil & gas, outsourcing, and digital businesses 44
  • 45. A true partner for families, entrepreneurs and management • Via board membership of portfolio companies, the BGF will provide: – guidance on finance and capital structure – practical support through business partners – strategic growth guidance • Involvement at board level not day-to-day operations • Conservative structures not reliant on debt • Minority investor • Long-term investments with flexibility 45
  • 46. The BGF will • Work alongside other investors • “Plug the gap" between Angel/VCT/Private Investors and Private Equity • Exit Stimulate and grow demand overall for investment into UK SME’s Private Equity Grow Venture Capital Business Angels Start-up Friends & Family £50k £500k £5m £50m 46
  • 47. Why Is BGF Different? • Focus on growth capital for SMEs • Flexible, long-term view on exit • Flexibility on investment structures – minority shareholder • Regional office network • Added value for investee companies • Focused diligence process and sensible investment timelines INCREASED CHOICE FOR SMEs 47
  • 49. Next events • IoD Events • Refreshments • See IoD website • Foot Anstey events • City conversations: Plymouth, tomorrow morning • Education team seminars • Finance in Cornwall 2012 • Date: 15 May 2012 • Time: 8.30am to 2pm • Venue: Lighthouse Cinema, Newquay
  • 50. THANK YOU Gavin Poole, partner Corporate team, Truro