Just before the UK entered lockdown in March of 2020, BGF, the most active investor of growth capital into UK SMEs, invested £15m for a hybrid equity-cum-loan-note stake in Yorkshire Wildlife Park (YWP).
The BGF investment was led by Barry Jackson, an investor in its Leeds office. Jackson says YWP really is a great example of the BGF’s approach to deals: a commitment of long-term capital by “an interested, but non-invasive and non-controlling investor”, with no pressure to exit to a specified time frame.
BGF, an independent private sector growth investment firm and member of the Corporate Finance Faculty, was set up in 2011 with the backing of Barclays, HSBC, Lloyds, NatWest and Standard Chartered. It was established in the wake of the financial crisis – the idea being that it would step in where others feared to tread. It would almost certainly seem to be doing so in this case. The equity element of its investment is permanent capital, and the loan notes have a maturity of around eight years.
BGF had an extended dialogue with YWP ahead of completion, against the COVID-19 backdrop and what has become a prolonged lockdown or quasi-lockdown.
“It was a risk to go ahead, of course, but at that point no one knew the extent of the risk or how long it would come to dominate the news agenda,” recounts Jackson. “Our investment view did not change. We believe in the fundamental soundness of the underlying business. This is an exceptional management team with an exceptional business, and an exceptional plan for future development.
“There will always be bumps in the road, but BGF is a genuine, long-term investor and we can afford to be patient. There will be challenges, but the business is well capitalised.”
At the end of June, the UK government announced an extra £100m rescue package for zoos to help mitigate the impact of the pandemic, noting that they were facing long-term financial problems. It had announced £14m of funding specifically for zoos in May. Despite the well documented challenges facing the business, BGF has supported the park, which will enable development and expansion to continue.
About the article
This is extracted from the full article in the Corporate Financier December 2020 / January 2021 edition - exclusively for Corporate Finance Faculty & Faculties Online members - who can access our award winning magazine in its originally designed form, and our extensive archive brought to you by the ICAEW Corporate Finance Faculty.
