Four Scottish businesses attract over £5 million from the Scottish Loan Fund
Finance Secretary John Swinney visited North-east oil and gas company Red Spider Technology today, 31 July 2012, as he announced that a further four ambitious businesses are benefiting from £5 million of funding from the Scottish Loan Fund with the option to drawdown up to £9 million. A total of £15 million has now been committed to growth and exporting Scottish companies since the Fund was launched.
Improving access to finance to support company growth and export is a key element of the Scottish Government’s economic strategy. The SLF was established by the Scottish Investment Bank, a division of Scottish Enterprise, to help address a specific funding gap in the SME market across Scotland. The Fund assists businesses that cannot access additional bank debt to support growth plans.
Managed by Maven Capital Partners, the SLF offers finance of between £250,000 and £5 million to Scottish-based growth or export businesses. The Fund, originally capitalised at £94m, has recently completed its second and final close, with £19 million of additional private sectors commitments, taking the total fund size to £113million.
Alongside a recent investment in an established Aberdeen-based energy services business, the three other companies receiving support from the Fund are Booth Welsh Automation, Red Spider Technology and ROVOP.
The SLF is providing working capital to Red Spider Technology. North-east based Red Spider manufactures and supplies a range of unique remotely operated well-intervention and completion tools to the international oil & gas Industry. The company has been working with Scottish Enterprise and Scottish Development International in recent years to increase its international trade with a focus on Europe and Asia.
Ayrshire-based engineering services firm Booth Welsh Automation (BWA) has also secured funding to help deliver its next phase of growth. The business employs over 200 people at its Stevenston base and the SLF investment will be used to provide additional working capital to help fund the forecast growth in new contracts.
Another successful business which is supported by Scottish Enterprise and receiving SLF funding is ROVOP, an independent specialist operator of Remotely Operated Vehicles (ROVs) servicing the offshore oil & gas and renewable sectors. The business is seeing a high level of enquiries and tender opportunities, and the SLF funding will provide valuable working capital for the acquisition of additional ROVs to be used in fulfilling long term wind farm contracts recently secured with major international marine contractors.
John Swinney, Cabinet Secretary for Finance and Sustainable Growth, said: “The Scottish Government and our enterprise agencies are providing the supportive business environment that will allow our small and medium sized companies to unlock new investment and secure affordable finance.
“I am encouraged to see that an additional four businesses are benefiting from the Loan Fund. We will continue to assist innovative, high growth firms as part of our drive to build sustainable economic growth for Scotland."
Andrew Craig, Partner at Maven, said: “We are encouraged by the quality of enquiries we continue to receive for the Scottish Loan Fund and Booth Welsh, Red Spider and ROVOP are the type of businesses for which the SLF was established, with innovative product offerings, strong growth strategies and ambitious management teams which will help contribute to their success.”
“We have been very impressed by the management team of each business and believe that they can now move forward with confidence in delivering their growth plans.”
Jim McFarlane, managing director of Scottish Enterprise, said: “We want more companies across Scotland who boast growth potential to be ambitious for the future and access finance to deliver business growth. These four latest deals for the Scottish Loan Fund represent exactly the kind of ‘can do’ culture needed to support economic recovery in Scotland and through the Scottish Loan Fund and our team of financial readiness experts in the Scottish Investment Bank, we would like to work with more businesses to help them access finance to grow.”
Martin Welsh, Managing Director of BWA, said: "We are pleased to have concluded the SLF funding, which will help take the business through the next stage in our growth plans, allowing us to further develop our client offering across global markets. The availability of the Scottish Loan Fund is vital for successful Scottish companies which are otherwise finding it difficult to access growth finance in a challenging economic climate.”
Steve Nicol, CEO of Red Spider, said: “A large part of our business is now about supplying products to the international market in order to meet our client’s growing demand expectations and realise our technologies’ potential. Traditional banking support is still hard to access for high growth businesses with multiple market strategies. The SLF has come along at just the right time to fuel our aggressive growth plans.”
Steven Gray, Managing Director of ROVOP, said: "The SLF investment will be valuable in allowing us to continue the expansion of the ROVOP business, at a time when we are seeing a high level of enquiries and have recently secured three long term contracts for major wind farm installation projects. The ability to operate a modern ROV fleet of sufficient size is vital to our capacity to fulfil contracts and offer tailored customer solutions.”
Background to the Scottish Loan Fund
In February 2011 Maven was selected as the fund manager of the Scottish Loan Fund, which was established by the Scottish Investment Bank with £55 million cornerstone public sector funding from Scottish Enterprise (including a contribution from the European Regional Development Fund and Highlands and Islands Enterprise). Further investment from the private sector, including Lloyds Banking Group, RBS, Clydesdale Bank, Santander and Strathclyde Pension Fund took the fund to £94 million on first close. In March 2012 there was further private sector endorsement when Aberdeen City Council Pension Fund invested in the fund and some private sector investors increased their commitments, taking the SLF to £113 million on its 2nd and final close.
The Fund was set up to address the market need for finance by SMEs. It focuses on providing mezzanine loans to growth and export businesses with an annual turnover of more than £1 million.
Maven Capital Partners UK LLP (www.mavencp.com)
Maven Capital Partners UK LLP (Maven) is a small-to-mid cap private equity house focused on the provision of growth capital and mezzanine finance to SMEs across the UK. It is one of the most active private equity fund managers in the country, managing on over £280 million of assets for a variety of client funds, including Venture Capital Trusts, the SLF, Capital for Enterprise Fund A, and a number of family offices and high net worth individuals.
Headquartered in Glasgow, and with five other offices throughout the UK, Maven has nationwide coverage of the market for SME finance and is able to source a variety of deals through 16 regionally based investment executives. With over 35 staff and partners, including three consultants, Maven executes a range of private company transactions, offers hands-on proactive portfolio management to investee companies and provides a fully integrated back-office support function to client and third party fund managers.
The Maven team has completed over 30 private company deals since June 2009, including 17 mezzanine and equity deals on behalf of the UK Government backed Capital for Enterprise Fund A, which was an initiative to help SMEs gain access to the financial support required to bridge the funding gap caused by the credit crisis.
About Booth Welsh
BWA provides specialist control engineering services, ranging from initial design through to installation, operational maintenance and decommissioning, for a range of industries, including pharmaceuticals/life sciences, food & drink, nuclear power generation and oil & gas. The business has an established client base in the UK and overseas markets such as Brazil, Angola and Saudi Arabia.
About Red Spider
Red Spider operates in a sector which is seeing an increasing global focus on exploiting existing wells, where intervention technologies are required in order to stimulate production, alongside continued investment in large new exploration programmes. Red Spider provides specialist patented remote open-close technologies that improve operational efficiency and HSE with rig time savings for well completion and intervention applications. The company operates internationally from bases in Aberdeen and Stavanger with on-going expansion in Asia Pacific, Middle East, West Africa and North and South America. The proposed SLF investment will provide a general working capital facility.
About ROVOP
ROVOP is a specialist operator or Remotely Operated Vehicles (ROVS). ROVs are unmanned underwater vehicles used to complete tasks subsea. The business operates in a sector experiencing sustained growth as companies are increasingly exploring new hostile locations, with rising demand for ROVs to provide drill and survey support, subsea construction capability, and on-going inspection, repair and maintenance services. An increase in off-shore wind farm installations has also led to a demand for ROVOP’s services. There are currently 16 operational UK offshore wind farms, with 8 more either under construction awaiting construction, and plans to install up to 10 Gigawatts of offshore wind generating capacity in Scottish waters which alone is predicted to generate around £30 billion of new investment by 2020.