Allen & Overy (A&O) advised the group of banks behind the creation of the Coalition’s £2.5bn Business Growth Fund (BGF).
Over the next few years the BGF is expected to help hundreds of small to mid-sized companies that need long-term funding to create new products and services, sell to new markets and create jobs for UK workers.
The fund, which was launched on 19 May in a ceremony attended by the business secretary Vince Cable, will invest £2m-£10m in each company in return for a minimum 10 per cent equity stake and a seat on the board for a BGF director.
The fund was established with the help of five of the country’s largest banks working alongside the British Bankers’ Association.
A&O acted as sole transaction counsel for the BGF and the five banks backing the scheme, comprising Barclays, HSBC, Lloyds Banking Group, RBS, and Standard Chartered Bank. A&O financial institutions corporate partner Alun Eynon-Evans led on the deal, assisted by senior associate Annabelle Croker.
London partners Mark Friend and Bob Penn advised on the antitrust and regulatory aspects of the deal respectively.
Eynon-Evans said: “It was a very interesting process because the BGF isn’t a classic private equity fund, nor is it a joint venture. It was set up as a plc and is more like what 3i was when it was established.
“The fund’s an independent entity that operates separately from the banks, but with a sophisticated governance structure.”
In a statement, BGF chief executive Stephen Welton added: “Barely eight months ago, in October 2010, the BGF began life as a 37-word sentence in the Business Finance Taskforce report. Today it’s open and ready for business. We have three offices, in Edinburgh, Birmingham and London; nearly 30 staff; FSA authorisation; a new website; an online application process; and most importantly, up to £2.5bn to invest in growing UK companies.”
PricewaterhouseCoopers advised on the tax issues.