SMMT Webinar: Business Growth Fund 11 November 2011

SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITED SMMT, the ‘S’ symbol and the ‘Driving the motor industry’ brandline are trademarks of SMMT Ltd Paul Everitt Chief executive SMMT

SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITED PAGE 2 • During presentations (14:30 – 15:00pm) everyone will be muted so that only the presenters will be heard.

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SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITED PAGE 3 Stephen Welton Chief executive BGF

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Stephen Welton Chief Executive

SMMT Webinar 11 November 2011 Our Origins and Aims A well recognised long-term structural gap dating back to the 1930s October 2010 Business Finance Taskforce commits to a new source of growth equity for SMEs May 2011 BGF launched, funded by five of the largest UK banks with £2.5bn of committed capital

BGF seeks to unlock the potential of UK businesses by providing long -term capital and being an active partner to fast-growing medium-sized companies… delivered locally.

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Creating the infrastructure to scale BGF and invest across the UK

Birmingham London Manchester 45 Church Street 21 Palmer Street Pall Mall Court B3 2RT SW1H 0AD 61-67 King Street M2 4PD

Edinburgh / Aberdeen Bristol 9-10 St Andrew Square 1 Friary, Temple Quay EH2 2AF BS13 6EA 7

Our Investment Strategy • £2-10m of or acquisition finance for minority equity stakes (10%-40%)

• No buy-outs, no change of control, but some change of ownership possible

• Well placed to work with the banks and optimise debt financing

• Board seat always taken to enhance partnership and support

• No change of control

• Long-term view as we invest from BGF balance sheet

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Who we invest in • Privately owned, profitable SMEs • turnover ‘sweet spot’ in the range of £5 million - £50 million • targeting double-digit growth through a scalable business model • differentiated products/ services • strategic position in a niche market • open to acquisitions and ‘buy and build’ strategies

• Broad sector focus - carve outs in financial services and property • Strong local approach: close and relevant to the businesses we invest in • Ambitious management teams with a strong track record and alignment of interests • Potential investee companies from manufacturing/ automotive sector particularly welcome

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Providing ‘more than money’

• Guidance and challenge on strategy for growth over the long-term • Non-executive involvement at board level, not day-to-day operations • Help manage succession and development of the business as it grows • Help determine the appropriate , including unlocking bank financing • Provide practical support through a network of business partners • Operating partners within the BGF • External network of Non Executive Directors

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Investment Process

• BGF will source its deals both on a proprietary basis as well as via intermediaries • One nationwide team approach to deal process with an internal Investment Committee involved in each deal from the outset • Early feedback with suggestions on alternative options if it is a ‘no’ • Due diligence from professional services firms as well as our own network of business partners • Anticipate 3-4 month deal process per investment. 6-8 weeks from agreeing heads of terms.

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Senior investment team

Chief Executive Head of Investments Business Director

Stephen Welton Richard Bishop Mark Bryant Prior to BGF: Prior to BGF: Prior to BGF: CCMP Partners/ JP Morgan M&H Plastics, Partners, Private General Electric, Equity, Henderson Ventures Druck Holdings Plc

Regional Directors Marion Bernard Andy Gregory Simon Munro Paul Oldham London and South East North of England and Scotland South West England Prior to BGF: Northern Ireland Prior to BGF: and Wales Northstar, 3i, Barclays Prior to BGF: JP Morgan, Lime Rock Prior to BGF: Key Capital Partners, 3i, Grant Thornton, LDC ISI Equity Partners

Investment Directors Alistair Brew Raf Goovaerts Chris Hodges Mark Freer Prior to BGF: Prior to BGF: Prior to BGF: Prior to BGF: Octopus, CCMP Capital, Carlyle, 3i, LDC and Barclays Close Bros, PwC JP Morgan PA Consulting Ventures

Ian Downing Tim Whittard Duncan Mcrae Prior to BGF: Prior to BGF: Prior to BGF: 3i Gresham Private Dunedin Capital Equity, Sovereign Partners Capital + 8-10 more investment professionals, with more on the way 12

Our first investment – Benefex

• £4.2 million of growth capital invested in this Southampton-based software provider

• Benefex expanding rapidly with 50% turnover year on year - turnover approaching £10m in 2012

“It was critical for us to find the right partner. BGF shared our enthusiasm and ambition and offered more than just money. Its advice, guidance and contacts will be invaluable” Benefex CEO Matt Waller “With BGF’s support, excellent companies such as Benefex are in a position to grow and create jobs” Business Secretary Rt. Hon Vince Cable MP

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Our second investment – Statesman Travel

• £4.25 million of growth capital invested in this independent travel management company • A story of growth – sales have increased 50% in four years, headcount from 40 to 75 under management team • Statesman’s acquisition of Commodore makes it one of top ten UK travel management companies – revenues approaching £100m • Working with debt providers to unlock additional credit “BGF has a compelling offering that will enable us to take our business to the next level” Statesman Travel Group Joint MD Mervyn Williamson

“Statesman has a proven and dynamic management team with a clear plan to grow their business” BGF CEO Stephen Welton 14

In summary • Meeting a well-recognised long-term structural gap

• Up to £2.5bn to invest … additional funds will increase choice and dramatically expand funding for SMEs

• Providing more than just money … guidance, networks, practical support

• We’ve come a long way in a very short time. Very pleased with overall volume and quality of enquiries … building a sustainable business to match this long-term demand

• Manufacturing businesses particularly welcome – but so far only 17% of enquiries from this sector

• Beyond investments … we recognise that we have a wider role to play: educating business owners, inspiring entrepreneurs, challenging policy makers … another important champion for British business

• Building BGF as an organisation capable of making 30-40 investments a year

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And a quick reminder of what we are not!

• Owned by the government or funded directly by the taxpayer

• A Quango

• Managed by the banks

• A lender

• A firm focussed on buy-outs

• A company focussed on start ups

• Running a charity!

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www.bgf.co.uk

Questions?

Thank You

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Questions and Answers

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