Scottish Investment Bank relaunches co-investment funds

The Scottish Co-investment Fund and Scottish Venture Fund will jointly invest £75m over the next three years.

The Scottish Investment Bank, the investment arm of Scottish Enterprise, has reorganised its co-investment funds with the aim of investing up to £75 million ($117 million; €106 million) into Scottish small and medium sized companies over the next three years, according to a statement.

SIB had consolidated its four co-investment funds into two vehicles, the Scottish Co-Investment Fund and the Scottish Venture Fund, that will provide growth capital and invest alongside parties that bring opportunities to the bank, the statement said.

The Scottish Seed Fund and the Scottish Portfolio Fund have been incorporated into the relaunched vehicles to streamline the process for investors, a spokesperson said. The £75 million is pooled between the two remaining funds, which will be flexible in size.

SCF III will make investments of up to £1.5 million, taking into account existing Scottish Enterprise investment in a company, an increase on the fund’s previous investment limit of £1 million. The fund will pursue deals of up to £10 million, an increase on the previous £2 million ceiling.

The fund’s minimum deal size has been reduced to £20,000 from £200,000 and its minimum investment to £10,000 from £100,000.

The fund will partner with experienced investors which, once accredited by SIB, will be able to team up and lead multiple deals with the bank, the statement said.

Between 2003 and March 2014 SIB invested £188 million in more than 900 transactions involving more than 340 companies, according to data provided by the spokesperson.

Its previous co-investments include Isle of Harris Distillers, which raised a total of £5.65 million in private sector investment, the statement said.

In June, SIB invested £172,991 of growth capital into Biogelx, which spun out of Strathclyde University and manufactures gel that mimics tissue for research laboratories, according to the statement. The funds will help the company expand internationally and to double its headcount.

SIB head Kerry Sharp noted in the statement that the bank had widened its investment parameters and simplified its criteria for its investors and investee companies.

“This greater flexibility to invest across a broader range of businesses will enable us to support more companies to reach their full potential, which in turn helps the Scottish economy to grow.”

Scottish Enterprise is Scotland’s main development agency.

SIB’s other co-investment funds include the Renewable Energy Investment Fund and the Scottish Recycling Fund. It is also an investor in the Scottish Loan Fund and Epidarex Capital’s life sciences fund, the statement said.