Scottish Enterprise investment portfolio generates record income
Income generated by Scottish Enterprise’s equity and debt investments exceeded £50 million during the last financial year – a record amount.
Seven trade exits contributed to income totalling £56m in FY2020/21, as did a partial realisation of the economic development agency’s shares in telecoms equipment company Calnex Solutions following its IPO in October 2020.
Alongside investment, Scottish Enterprise provided Calnex with wraparound services in the company’s journey from start-up to scale-up to IPO.
The value of the agency’s investment portfolio increased from £309m (FY2019/20) to £423m during the year, reflecting the contribution its investee companies can make to post-pandemic economic recovery.
The portfolio now comprises over 340 ambitious companies operating in several sectors across Scotland. They include Dundee-headquartered e-commerce company Snappy Shopper, Edinburgh-based agritech business Intelligent Growth Solutions, and Stonehaven-located electric vehicle charging system developer Trojan Energy.
Scottish Enterprise has provided commercial equity and debt finance to predominantly early-stage companies with high-growth potential since 2003, addressing the demand for risk capital among this type of business.
Kerry Sharp, Director of Growth Investments at Scottish Enterprise, said: “Last year was our strongest year on record in terms of income generated, demonstrating the significant financial returns that can result from adopting a patient approach to investing risk capital in innovative, early-stage, high-growth companies in Scotland.
“These companies continue to make a positive contribution to Scotland’s economy, with returns being recycled into new projects that will support further economic growth.”
Most of the agency’s investments are made via its two main equity funds – the Scottish Co-investment Fund and the Scottish Venture Fund – alongside investment from private sector investors.
FY2020/21 saw Scottish Enterprise invest £78m into 177 companies, leveraging £122m of private sector investment.
The agency expects this investment to support the creation of more than 900 new jobs, at least £11m of capital expenditure, and over £60m of investment in research and development activity.
Kerry Sharp added: “We continue to work with a wide range of domestic and international private sector co-investors to support those early-stage innovators whose success is intrinsic to future economic growth.
“Effective collaboration between the public and private sectors is vital to enabling Scotland’s transition to a more inclusive and sustainable net-zero economy.”
Examples of Scottish Enterprise investee companies
Snappy Shopper: Scottish Enterprise first invested in the Dundee headquartered e-commerce company in 2019, investing again in 2020 via the agency’s Early Stage Growth Challenge Fund. Investment has been used to accelerate sales growth, strengthen the team, facilitate the company’s expansion into the rest of the UK, and leverage private sector capital. Scottish Enterprise also provided the company with scaling support, including intellectual property advice and the development of an investor proposition.
Trojan Energy: Scottish Enterprise provided the electric vehicle charging system developer, located in Stonehaven, with investment via the Early Stage Growth Challenge Fund in 2020, ensuring the company was able to accelerate the commercialisation of its technology despite the onset of the Covid-19 pandemic. Further investment was provided to the company in 2021 alongside Equity Gap and Alba Equity. Trojan also benefited from advisory support through Scottish Enterprise’s scaling services.
Intelligent Growth Solutions: Scottish Enterprise has provided investment, scaling and internationalisation support to the Edinburgh-based agritech business. IGS is recognised as a world leader in the provision of vertical farming technology with its products being aligned with Scotland’s ambitions of transitioning to a net zero economy.