48-50-deal-zone-V2 14/12/09 10:10 Page 47
~DEAL ZONE~
Government propping up regional venture capital
V
enture capital (VC) investing growth company specialist Active CM, says, private sector-led VC market in the South
outside London and the South ‘The reliance on government comes through East and a public sector-dependent one in
East depends heavily on public matched funding and is very largely Brussels- the rest of the UK.
sector funds, according to a study. provided. Its continuation therefore is far This has occurred in tandem with a drop
More than half of all investments in other from assured.’ in the total share of private equity
UK regions since 2001 have involved The most public sector-dependent regions investment going to early-stage deals from
publicly backed VC funds, rising to more are Northern Ireland and the West Midlands 11 per cent in 2000 to 4.1 per cent last year,
than 80 per cent during the financial crisis (see chart), both of which have seen public according to the BVCA, which represents
last year, finds the research from the sector involvement in more than four-fifths the private equity industry. ■
University of Strathclyde Business School of VC deals since 2001.
100
and enterprise support body NESTA. However, Wales is the region
Private funds
Colin Mason and Yannis Pierrakis, the with the largest share of deals
Mixed
authors of the report, say the trend is due funded purely by government
80
Public funds
to a decline in private sector VC funds money without private sector
following the dotcom crash, as well as the co-investment. 60
rise of government initiatives aiming to After London and the South
plug the gap. East, the regions with the
40
‘Although government-backed VC smallest share of public sector-
schemes have had a positive effect on backed deals are the South West v
enture capital transactions
20
company performance and job creation, this and the East Midlands.
% of
effect has been significantly less than the Mason and Pierrakis argue
effects that purely private venture capital that government initiatives to
0
est est
would be expected to bring,’ they conclude. address regional imbalances in
ales
London
idlands N East
W W
idlands
Others agree that the findings are of early-stage investing have led to
Scotland
N Ireland
South EastSouth W
M N
E M W
concern. Rick Muir-Simpson, a director of a widening gap between a Source: University of Strathclyde Business School
Longshot seeks acquisitions in leisure
I
nvestment firm Longshot has secured in early discussions with potential targets. struggling businesses in the leisure industry.
more than £30 million to acquire Longshot’s directors, Ollie Vigors and Vigors and Cadbury established
companies in the leisure sector and is Joel Cadbury, raised the money primarily Longshot in 1994 and built the company
from institutional investors to a value of more than £50 million
and are looking to invest in before disposing of its investments by
hotels, restaurants, pubs, July 2007. Previous portfolio companies
gyms and fitness clubs have included 24-hour restaurant Vingt-
with valuations of around Quatre, health and fitness centre The
£10 million. They will Third Space and private members’ club
consider deals with The Groucho Club.
‘underlying asset value’ as well Sitting on Longshot’s board as non-
as turnaround opportunities. executive directors are Tim Morgan, who
In addition, Longshot has was previously an executive at investment
entered into a joint venture bank Goldman Sachs, and Tommy Sopwith,
with accountancy firm the former chairman of motor racing
haysmacintyre to provide venue Silverstone Circuits and director of
consultancy services to exhibition centre Earls Court Olympia. ■
BUSINESS XL 47
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