The British Business Bank has announced a cornerstone commitment of £40m to FPE Capital’s Fund IV, to support high growth smaller businesses across the UK.
The Bank previously committed £20m to FPE’s Fund II in 2017 and this latest commitment to Fund IV forms part of a first close which surpasses the total size of the predecessor fund.
This latest commitment is made under the Bank’s growth equity strategy. This expanded mandate enables the Bank to invest in lower-mid-market private equity funds backing smaller businesses that are aligned with the Government’s eight growth-driving Industrial Strategy sectors.
Operating on a fully commercial basis, the growth equity strategy aims to crowd in additional private capital to unlock scale-up finance for UK companies and strengthen regional growth across key sectors of the economy.
Founded in 2016, FPE is a specialist private equity investor that focuses on scaling B2B software, data and software services businesses. It typically invests in companies across the UK and Ireland with enterprise values of £10m-£75m.
This fund will continue to target founder-led businesses, often as the first institutional investor. FPE will also use its specialist knowledge, expertise and network to help its concentrated portfolio of companies to scale.
“There is a significant funding gap in the lower-mid-market, particularly for those smaller businesses that have outgrown early-stage funding,” said Adam Kelly, managing director and co-head of funds, British Business Bank.
“FPE is helping to address this by providing a flexible solution for businesses at a critical stage of their growth journey. By backing firms like FPE through our expanded mandate, the Bank is increasing the supply of capital available to UK businesses ready to move into their next phase of growth.”
Blair McDougall, Minister for Small Business and Economic Transformation said: “Through our Modern Industrial Strategy, we are unlocking the investment high-growth firms need to thrive and compete from the UK.
“This support is focused on the most ambitious SMEs in key sectors, enabling them to scale up, create high-quality jobs and power growth, and raise living standards across the UK.”
Richard Coldwell, investment director, funds, British Business Bank, said: “FPE is a specialist growth investor with a strong track record in scaling UK software, data and software services businesses. The Bank’s commitment will ensure that growth capital is channelled to high potential companies entering the next stage of their growth journey.
“By focusing on the digital and technology, and professional and business services sectors of the Industrial Strategy, FPE will contribute to creating high-value jobs and driving economic growth across UK.”