The team at Northern Ireland fund manager Whiterock were in no doubt that there would be demand for funding from its new £75m equity investment fund when they announced its creation earlier this year.
But the level of interest since the fund was first unveiled in March and after its official launch in June has surpassed all initial expectations following an extensive period of research within the market.
“There has been fantastic interest,” Paul Millar, chief executive of Whiterock, said. “Since announcing the fund, we have talked to a wide range of ambitious Northern Ireland businesses who are seeking an investment partner to help them realise their growth ambitions. The levels of demand and the high quality of the companies we’re in discussions with means we will be in a position to close our first investments soon, which is an excellent start for the fund.”
The new £75m fund is the largest ever locally managed equity investment fund for NI companies. Whiterock expects to make investments of between £1m and £5m for minority shareholdings in growth and scaling companies, with capacity for further follow on funding if required by portfolio companies.
Interest in the new fund has been helped by the fact that Whiterock has been operating in Northern Ireland for more than 10 years and has a strong network across all parts of the region, particularly in the SME and advisory community. It has managed in excess of £225m across five funds and to date has deployed over £125m, which has leveraged a further £100m funding from other funders.
Owned by a local senior management team, Whiterock has provided debt funding to over 180 SMEs based in Northern Ireland through Growth Loan Fund I and II, Growth Finance Fund and more recently the Investment Fund for NI.
The Growth Capital Fund team is led by Millar and fellow Whiterock director David McCurley, with investment directors Graham Ferguson, former chief financial officer of First Derivative, and Chris Trotter, who joined Whiterock this year from Clarendon Fund Managers, alongside finance director Jenna Mairs and investment analyst Sara McCrea.
“This is a sector agnostic fund and it has been really interesting to see the breadth of companies from different industries that have engaged with our team already,” David McCurley said.
“We said at the outset that the Growth Capital Fund will invest in businesses across a range of sectors so long as they have strong management teams, a demonstrated and proven business model and high growth potential. We are fortunate in Northern Ireland to have so many companies who fit those criteria, many of whom clearly see the opportunity in taking equity investment to fuel the next phase of their growth.”
Whiterock expects the fund to be deployed over a five-year investment period, investing in 15-20 companies during that time across sectors. These are likely to include, but aren’t limited to digital, IT and creative, fintech and financial services, life and health sciences, agri-tech, and advanced manufacturing and engineering.
“We want to be a strategic partner that helps the businesses we invest in to achieve their growth ambitions, while also generating attractive returns for our investors,” Graham Ferguson said.
“Funding options have improved for companies here over the past decade, but independent research from the British Business Bank has found there is still a clear equity gap in Northern Ireland when it comes to locally based private equity investors, particularly in the £1m-£5m investment range. That’s the level of investment we believe many ambitious businesses in this part of the world are seeking in order to implement the next steps of their plans to scale up.”
The British Business Bank, the UK Government’s economic development bank, has invested 60% of the fund (£45m) through its Enterprise Capital Funds programme, with the remaining 40% (£30m) coming from private investors, including several local family offices and high net worth individuals. The fund plans to make minority stake investments in companies and will then work alongside them as they implement expansion strategies.
“The Growth Capital Fund is the largest ever locally managed equity fund for NI companies,” Chris Trotter said.
“Whiterock has been actively supporting local businesses for over a decade and our well-established team has a proven track record of deploying funds in the market. We are really keen to hear from businesses and their advisors who want to explore how a minority equity investment could help them accelerate growth and take them to the next level.”