Bridges Ventures holds £72 million first close of third Flagship Fund
Evidence that institutional investors increasingly recognise that generating positive social or environmental impact can drive attractive financial returns
Bridges Ventures today announces the launch of its sustainable growth fund, Bridges Ventures Fund III (“Fund III”) with a first close on equity commitments of £72 million. This sum is almost equal to the final close of the firm’s Fund II.
Fund III continues Bridges Ventures’ focus on the provision of growth capital to small and medium sized businesses (SMEs) in sectors where underlying social or environmental need creates the opportunity for both commercial returns and positive impacts.
The Fund will build upon the success of Bridges’ first two funds (“Fund I” and “Fund II”), which were closed in 2002 and 2007 with fund sizes of £40m and £75m respectively. Through these funds Bridges has developed a focus on four key impact themes: Underserved Areas; Environment; Education & Skills and Health & Wellbeing, where underlying social or environmental problems create an imperative for change and attractive growth opportunities for entrepreneurial businesses.
The first close was achieved with the support of investors that have backed previous Bridges Ventures funds and a new investor, the European Investment Fund, which joins Fund III as the single largest investor to date.
Existing investors following on into this Fund include institutions such as Cooperative Insurance, HSBC Bank plc, West Midlands Pension Fund and South Yorkshire Pensions Authority; private equity backers such as 3i and Doughty Hanson; trusts, endowments and individuals such as Wittington Investments, Merton College, the R&S Cohen Foundation, SHINE – Support and Help in Education, Lesing Nominees, Richard Oldfield, Sir Harry Solomon, and Martyn Webster. Bridges Ventures is now beginning discussions with several potential further investors and Fund III is expected to grow substantially over the coming twelve months.
Philip Newborough, Managing Partner at Bridges Ventures, said:
“We are proud to launch this third fund with such strong backing from our existing investors and delighted that the European Investment Fund (EIF) has joined the first close as a new investor with Bridges Ventures. To have achieved a successful first close in a difficult fund-raising environment sends 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. We believe that our Fund provides investors with an attractive and differentiated responsible investment opportunity in the growth SME segment, which despite a combined annual turnover of £1.6tn representing 49% of private sector output* , experiences a significant financing gap. Our track record and experience to date demonstrates that by directing capital towards areas where there are strong and pressing social or environmental needs, we are able to find pockets of growth and produce superior financial returns.”
Funds I and II have shown strong investment performance, with successful exits to date ranging from 12-216% IRR to the Funds. As described in the Bridges 2011 IMPACT report, Bridges portfolio companies generated 31% year-on-year revenue growth last year, employ 1,481 people, up 8% in the year and almost 90% of the Funds’ investment has gone into the most deprived 25% of the country. Examples of exited and continuing portfolio companies include:
• The Office Group, a provider of flexible office space to SMEs with seven sites, predominantly in underserved areas. The Office specialises in creating spaces that are simple and considered in design with a strong community focus and eco-friendly approach. Bridges developed the Office from concept, finding the management team, supporting the site-by-site roll-out and growing the business to exit. Phased investment of £10m grew the business to an operating profit of over £4.2m before achieving a successful exit.
• The Gym Group provides low-cost (£15.99/month) health and fitness facilities in purpose-built gyms which are open 24 hours a day and mainly located in underserved areas. Bridges incubated this idea from the concept stage, hired the management team and have been instrumental in supporting the business since its first site opened in Hounslow in July 2007. The past year saw The Gym grow rapidly, from 5 to 13 units in the year to 31 March 2011 and the overall membership growth was 117% over the year.
• Whelan Refining, the UK’s first waste oil refining plant, which re-refines waste oil to produce a range of virgin-grade base oil and fuel oil products. Bridges Ventures led the investment round to enable the refurbishment and re-commissioning of a mothballed plant in Stoke-on-Trent. The compound annual growth rate of its turnover has been 92% and the company has diverted over 50,000 tonnes of waste oil from combustion since 2007.
*Department for Business Skills and Innovation: (http://stats.bis.gov.uk/UKSA/ed/sa20101013.htm)
Claire Aslett, Nathan Williams Capital MSL
0207 307 5343
Notes to Editors
About Bridges Ventures
Bridges Ventures LLP (“Bridges Ventures”) is a sustainable growth investor established in 2002 with a mission to use its commercial expertise to achieve focused social or environmental benefit, as well as attractive returns for investors. Including Fund III, Bridges Ventures has raised six funds to date which total almost £260m: Sustainable Growth Funds I, II and III, the Bridges Sustainable Property Fund, CarePlaces Partnership and the Bridges Social Entrepreneurs Fund.
The Bridges Sustainable Growth Funds invest in growth businesses across the four impact themes of Underserved Areas, Education & Skills, Environment and Health & Well-being. The Funds typically invest up to £10m at a time in ambitious, entrepreneurial businesses including early stage, growth capital and buyouts / buy ins.
Since 2002, these Funds have made equity investments totaling over £75m in 34 businesses.
For more information please go to www.bridgesventures.com
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