New fund to benefit high-growth potential SMEs

The establishment of Australian Business Growth Fund has been described as “excellent news” for the SME sector by the Australian Small Business and Family Enterprise Ombudsman Kate Carnell, who recommended such an initiative in her office’s recent Affordable Capital for SME Growth report.

The fund will allow SMEs with annual revenue of between $2 million and $100 million to apply for long-term equity capital investment of between $5 million and $15 million. It has appointed Anthony Healy as CEO and Will Hodgman as Chairman, and will be managed by private sector expertise.

“[The] launch of the Australian Business Growth Fund is fantastic news for high growth potential SMEs who require essential long-term equity finance to flourish,” Carnell said. “The fund will fill the critical gap, identified in our Affordable Capital for SME Growth report, for patient capital to enable our up-and-coming SMEs to succeed.”

Under the scheme, businesses applying for the Business Growth Fund need to demonstrate three years of revenue growth and profitability, though there are allowances which take into account the impact of the COVID-19 crisis on recent business performance. Minority shareholding of between 10 per cent and 40 per cent will enable the businesses to retain control of their company while providing the funds they need to invest in growth.

The ASBFEO noted that similar models in the UK and Canada are tried and tested – overcoming barriers to accessing affordable capital for businesses that have gone on to demonstrate successful growth.

“We welcome both the federal government investment in the fund, along with the major banks and financial institutions’ contribution. The fund is valued at $540 million and we welcome the ambition to grow the fund to $1 billion as it matures,” Carnell said. “In supporting our high growth potential SMEs, the Australian Business Growth Fund will play a significant role in encouraging business growth and economic recovery at a time when we need it most.”

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