Bridges' fundraising journey signals strong SME interest

Bridges Ventures has corralled £72m in commitments for the first close on its latest SME-focused fund, nearly eclipsing the total fundraising efforts of its last fund raised pre-crisis.

Sir Ronald Cohen-led Bridges Ventures has almost matched the size of its previous vehicle with its latest fundraising’s first close. Bridges Ventures Fund III has garnered £72 million (€85 million; $112 million) in commitments, almost the size of its previous vehicle which garnered £75 million in 2007.

Philip Newborough, managing partner at Bridges, said in a statement the close defied a difficult fund-raising environment, sending a strong signal “that, increasingly investors understand that generating positive environmental and social impact can drive attractive financial returns as well as make a difference.

“In the current economic climate in particular, growth is hard to come by,” added Newborough, saying the fund would provide investors with “an attractive and differentiated responsible investment opportunity in the growth SME segment, which despite a combined annual turnover of £1.6 trillion representing 49 percent of private sector output, experiences a significant financing gap.”

The firm declined to comment on a fund target or hard-cap, but said it was in discussions with a number of potential investors, and expected the fund to grow significantly over the next 12 months.

The new fund continues Bridge’s focus on growth capital investments in small to medium-sized businesses “in sectors where underlying social or environmental need creates the opportunity for commercial returns and positive impacts”, it said in a statement. 

The firm said exits from its previous two funds had generated internal rates of return varying from 12 percent to 216 percent. Portfolio companies have generated year-on-year revenue growth of 31 percent, it said.

LPs to have re-upped with Bridges include HSBC Bank, West Midlands Pension Fund, and Cooperative Insurance, as well as private equity peers 3i Group and Doughty Hanson and a host of high net worth individuals, family offices and charitable organisations such as Support and Help in education (SHINE).

The European Investment Fund has also invested in the new fund, becoming the new vehicle's biggest backer to date, though the size of its fund commitment remains undisclosed.