Meet the investor: Marion Bernard, Business Growth Fund
The regional director for the fund with a £2.5bn balance sheet on star performing investments, the secret ingredient to funding, and what kills deals
Firm: BGF (Business Growth Fund)
Name: Marion Bernard, regional director for London & South East
Where are you based?
I’m based in central London, but cover London and the South East region for BGF so am meeting entrepreneurs across the south east region, with portfolio companies based in Great Yarmouth to Tunbridge Wells and Guildford as well as in central London.
BGF backs entrepreneurs across the UK with offices in Reading, Bristol, Birmingham, Manchester, Leeds, Edinburgh and Aberdeen as well as London.
What kind of investor are you?
BGF is a growth capital investor, providing long-term, patient capital. Our funding has facilitated stores roll-outs across the UK for companies like Gymbox, Boost Juice Bars, Barburrito and Cass Art, domestic and international acquisitions for businesses like Cennox, Unruly Media and 3sun Group and boosted sales and marketing teams in companies such as Jumpstart and Trunki.
We also provide a solid financial platform for portfolio companies to tender for larger contracts, as in the cases of Skyscape, Benefex and Renal Services.
What kind of deals do you finance?
We invest in profitable UK companies and initially invest between £2m–£10m of long term capital for a minority equity stake and a seat on the company’s board.
We back both privately owned and AIM-listed companies typically with a turnover of £5m–£100 across all business sectors with the exception of regulated financial services and property development. By way of example, we’ve invested in everything from ceramics manufacturers to window cleaners and opticians to advertising agencies.
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What kind of person do you invest in?
If I had to pick one key attribute of the entrepreneurs and business owners that we invest in, it would be ambition. It is very difficult for us to get excited about backing a company if the passion isn’t evident from the person running it.
Aside from this, we are looking for management teams of UK companies with a good track record, a proven business model and a desire to grow.
How do you source prospects?
We meet with hundreds of companies throughout the course of a year and these come from a variety of sources. Our shareholder banks are a fantastic source of introductions for us, recognising what BGF capital can do to accelerate growth and strengthen the balance sheets of the companies they work with.
Local advisory firms are also key to us – they know the businesses in their regions better than anyone really and have passed a lot of interesting investment opportunities our way. BGF’s Talent Network of senior non-executive directors and chairmen also introduce us to a number of exciting and innovative businesses they hold board positions with as BGF is seen as a strong promoter of growth.
What is your ideal investment?
A well-established and successful business that has the opportunity to scale with the benefit of a partnership with BGF. One where the interests of the existing owners and BGF are aligned and we can work closely together to accelerate growth.
What are your USPs?
We have a number of qualities which we feel set us apart from other investors. The principle one for me would be our minority investment approach. We are backing entrepreneurs and management teams, not buying companies, and it is important to BGF to leave owners incentivised in the businesses they have built up.
Second would be our long-term approach. We invest directly from our own £2.5bn balance sheet and so have the flexibility to offer long-term funding of up to 10 years which in turn allows us to develop a meaningful partnership based on shared goals and objectives from the outset. We don’t need to keep raising money to return it. We can also provide further funding as our investee companies continue to grow.
The BGF platform is another particularly strong selling point for us, allowing companies to build from a solid platform and achieve their individual ambitions. We have a strong local approach and with eight offices across the UK as we believe that we need to be close and relevant to the businesses we invest in.
The CEOs of some of our investee companies highlight our ability to introduce senior board level support via our Talent Network as equally, if not more impactful, than the money we bring to the table. Having a sounding board in the form of someone who has been there and done it before when running a company is invaluable.
What are the hot sectors?
BGF does not employ sector specialists given the breadth of what we invest in in terms of industries. Instead, we look for strong management teams, businesses that have the ability to scale and in markets with the potential for growth. Sectors in which we have made a number of investments to date include manufacturing, business services, retail and leisure and TMT.
Three things a company should be able to offer an investor?
They should be able to offer us:
- Confidence in their track record of successes to date
- Realistic growth plans for their business
- An open approach to the partnership model offered by BGF
What is the cardinal sin when looking for investment?
Over optimism combined with an unwillingness to listen or communicate with us about what is really happening within the business. The sooner we can understand the risks and challenges within a business the sooner we can work together to find solutions to achieve growth in a realistic manner.
What continuing involvement do you like in an investment?
Close value added involvement – we do not wish to run the business day to day as minority investors, but we do want to work closely with other shareholders and key members of the management team to help maximise growth.
What has been your best performing investment to date?
From the London portfolio, I would pick The Consulting Consortium, the UK’s largest independent regulatory consultancy. We invested £10m in March 2014 to help build the firm’s marketing, personnel and infrastructure. Under CEO Joanne Smith’s management, TCC has experienced impressive growth over the past year.
Alternatively, Camberley-based Cennox, the specialist ATM services group, has also performed very well since BGF’s initial investment. Our initial £3m equity investment in June 2012 enabled the Cennox group to fund working capital, invest in additional staff and ramp up its international operations. BGF has since invested a further £2m to part fund the acquisition of US-based Sterling Group Inc in December 2013 which in turn acquired PSSI International Inc., a southern California-based company. The purchases significantly boosted Cennox’s US presence.
Reading-based Bullitt has also performed exceptionally well, securing new partnerships for its specialist mobile phones and audio products with the likes of CAT, Ministry of Sound, Ted Baker and Kodak and increasing revenues from £5m in 2011 to £65m in 2014.