Two UK private equity firms have agreed to manage government-backed investment funds as part of an initiative to support small British businesses.
Aberdeen Asset Managers Private Equity and Octopus Investments will manage £30 million (€33 million ;$44 million ) each as part of a £75 million investment mandate from the government’s Real Help for Business programme granted via the Capital for Enterprise fund (CfE) which launched in January.
The new funds – Octopus Capital for Enterprise Fund and the Capital for Enterprise Fund A- will invest between £200,000 and £2 million of equity or part equity into small to medium enterprises (SMEs). They will invest via a combination of ordinary shares and loan notes, with an anticipated term of up to five years.
“Following an exhaustive due diligence process we are extremely pleased to be working with two of the leading venture capital trust managers in the UK,” Roy Earley, chief executive of CfE, said in a statement.
Andrew Craig, investment director at Aberdeen, said there is a clear need for this fund as it can offer highly flexible funding solutions by way of mezzanine finance, equity or a mixture of both.
This sentiment was echoed by the Octopus: “We can really make a difference and provide SMEs with the funding solutions they so urgently require in the current market environment,” Chris Hulatt, director and co-founder, said in a statement.