Posted on Thursday 2 January 2020 by Ulster Business
Northern Ireland is actively trying to attract new money from outside these shores in a bid to boost burgeoning young start-ups, local funds are continuing to see the value in some of our emerging businesses while industry stalwarts are now in private fund ownership. Ulster Business examines the investment landscape
William Russell – the Lord Mayor of the City of London – paid a visit to Northern Ireland at the tail end of last year to help encourage firms here to collaborate in international trade missions in a bid to attract venture capital in areas such as fintech.
Investment outside these shores among Northern Ireland firms has been on the rise in recent years, and with burgeoning sectors such as IT, cyber-security and fintech, there’s never been a more crucial time for companies here to look outwards, as well as inwards, when it comes to the financing and support of their own company’s growth trajectory.
Venture capital can act as a springboard for the next stage of a fledgling business’s flight path, while private equity funds can often be in the market to take a majority chunk of an already established company.
On the appointment of a new associate director, Deborah Archer, Gordon McElroy of MKB Law said there has been expansion in investment here in the last 12 months.
“There has been a growth in the private equity investor, construction industry, across the province and manufacturing businesses as well as technology, renewables and the agri-food sector – both in the buying, consolidation and selling of companies,” he said.
As far as company ownership goes, there are several local investors here – primarily targeting early stage businesses – while some industry stalwarts are now in the hands of private equity funds.
That includes Belfast’s Odyssey Pavillion. It’s undergoing a major £17m redevelopment, which will see a new cinema and bowling alley move in as part of the initial refurbishment phase.
It’s now in the hands of Matagorda 2 – a consortium of private equity with Deutsche Bank as the funding partners.
And Belfast City Airport is now in the hands of venture capital company 3i. It formally assumed ownership of George Best Belfast City Airport in 2017, after a multi-million takeover deal cleared all its regulatory requirements.
Speaking as part of our Leaders in Business edition, the airport’s commercial director, Katy Best, said: “We have had a really exciting couple of years under our new ownership with 3i. They have made a very considerable investment into the airport, as well as having reorganised and made significant investment in our security processing, which has had a pretty material impact on the consistency of the speed at which people are coming through.”
And across the UK, Eddie Stobart was handed a lifeline from a fund as part of a proposed £55m rescue deal.
The Financial Conduct Authority (FCA) has approved the change in control application needed for its proposed financing of Stobart, from private equity firm Douglas Bay Capital Fund (DBAY).
Here, some reports have suggested the number of early-stage private equity investments and buyouts is up in the first half of 2019, while overall M&A deal value has reduced.
In Northern Ireland, while the pool remains comparatively small, there remain some venture capital funds continuing investment in early stage and expanding young businesses here.
In August last year, Silform, which has an operation in Co Tyrone, received £2m in funding from Bank of Ireland’s Kernel Capital, with private investors. The company converts coal waste into pellets for industry.
A month earlier, Kernel Capital led a £1.6m fresh round of private equity funding for Belfast-based tech firm Automated Intelligence.
The fund pumped £750,000 into the venture, bringing its total investment in the firm to date to £1.7m.
And in November, tech firm Cloudsmith secured £2.1m in funding in one of the biggest early stage rounds for a start-up.
The funding round was led by Frontline Ventures and co-investors MMC Ventures, and by Techstart Ventures through its Invest NI fund Techstart.
Crescent Capital – a Belfast-based fund which has been in operation since 1995 – has expanded on its portfolio of businesses in the last year or so. It has counted companies such as Andor and Lagan Technology as businesses in which it previously invested in.
And in December 2018, Londonderry-based IT firm Modern Democracy received a £750,000 investment from Crescent Capital and TechStart.
Economic development agency Invest NI has also launched two new equity funds offering investments in high-growth potential SMEs.
The TechStart II Seed Fund and Crescent Capital IV Development Fund have been created as part of Invest NI’s Access to Finance portfolio, which provides loan and equity funding to SMEs.
Belfast technology company Locate a Locum, which helps locum healthcare professionals find flexible work opportunities, secured £1m in equity funding that will be used to grow and scale the business.
The firm landed the equity investment to fund the next phase of its development – including the creation of six new jobs – from Techstart Ventures, private investors and Co-Fund NI, a European Regional Development Fund managed by Clarendon Fund Managers.
Then there’s Upstream. Judith Totten’s firm provides finance, trade and credit management services and supports funding of over £100m to Northern Ireland businesses.
After a long and successful career at Northern Bank and latterly Danske Bank, she stepped away from job security to set up Upstream, which was established as Keys Commercial Finance, eight years ago.
Upstream itself is now looking at “significant” growth after securing the backing of a US investor. The identity of the investor has not been disclosed, but Judith has said new backing had been secured from “an ambitious US-based debt and equity fund which specialises in financial services and funding receivables”.