Deal Maker of the Year Awards 2012 WINNER - UK DEAL: BGF invests in AFG Media

NAME: Duncan Macrae COMPANY: Business Growth Fund POSITION: Investment Director TEL: 0131 224 0141 MOBILE: 07815 735855 EMAIL: duncan.macrae@bgf.co.uk

BIO:

Duncan joined BGF in August 2011 as an Investment Director in its Edinburgh office. BGF invests between £2m and £10m in return for a minority stake in businesses that are typically turning over between £5m and £100m. Duncan’s remit is to generate investment opportunities in Scotland.

Duncan’s remit is to generate investment opportunities in Scotland

Duncan’s most recent role was in the retail sector where he was Finance Director of a chain of high fashion stores. Prior to that Duncan was a Director of Dunedin Capital Partners where he led a number of mid-market buyout transactions throughout the UK between 2001 and 2009. He has also spent time in the corporate finance arena with Noble & Company Ltd as well as the textile industry with Dawson International Plc.

Duncan, a former Scotland under 21 rugby internationalist, holds an MA from the University of Cambridge where he read Natural Sciences. He is also a chartered accountant having qualified with the Institute of Chartered Accountants of Scotland. Duncan is married with two children.

DEAL OVERVIEW:

AFG Media is certainly one of the more colourful businesses that BGF has backed to date but behind the fun exterior lies a rapidly growing business with a talented and driven management team which, in just three years, has built an extremely strong company with a well-known brand. In July 2012 we invested £4.2m of growth capital in the company.

Our aim at BGF is to unlock the potential of fast-growing UK businesses that need long-term capital to drive their future success. BGF capital is being used to fund a wide variety of business plans and in AFG’s case this was to enable the company to bring new product lines to market; to expand the potential for existing products and to develop its supply chain.

Founded in 2009 by Edinburgh University graduates Gregor Lawson and brothers Fraser and Ali Smeaton, AFG is the fancy dress and party fashion company behind the Morphsuits™ phenomenon but has also has expanded to include party wear under the name Foul Fashion and a brand of highly patterned and colourful golf clothing under the name Royal & Awesome.

Our investment in AFG is a prime example of how we are providing capital in an attractive way that works for ambitious business owners. That is why we only ever take a minority stake, we invest for the long term, and why we are focused on providing much more than just money. We are building, not buying, businesses.

In only three years, revenues at AFG have grown from £1.2 million to more than £10 million. The company has experienced growth of 300 per cent year on year on the back of a marketing campaign that has been driven by social media and now boasts over one million fans on its Facebook page. AFG received a major boost last year when US retail chain Party City, which has over 1000 fancy dress stores, placed an initial order of Morphsuits™ during the run-up to Halloween. This was clearly a rapidly growing business but one that also had plenty of potential to use additional capital.

In addition to funding, BGF introduced a new Chairman: Ralph Kugler has held board positions at a number of global companies including Unilever and Inter- Continental Hotels plc. Ralph brings exceptional experience, sound counsel and great networks. BGF is developing relationships with a broad range of experienced business leaders from across the corporate spectrum who can offer valued executive and non-executive support to our portfolio companies.

Moving to today, current trading is strong at the company and the Halloween period this year has been particularly good with sales up more than 30% on 2011. In addition, AFG has just launched a Power Rangers branded range of Morphsuits™ in addition to expanding the children’s market, particularly important in the run up to Christmas. This is an exciting and dynamic company to be involved with and we hope to meet more business like AFG in 2013.