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The Australian Business Growth Fund (BGF) has been formally established, providing eligible Australian SMEs between $5 mn to $15 mn in long-term equity capital investments.
Eligible SMEs include Australian businesses that “have generated annual revenue between $2 million and $100 million and can demonstrate three years of revenue growth and profitability, allowing for the impact of COVID-19 on recent business performance,” according to a media release from Treasurer Josh Frydenberg.
The Treasurer has also indicated that the BGF “will shortly begin engaging with SMEs”.
The BGF’s investment objectives are to:
- Increase the availability of patient equity capital to Australian SMEs;
- Increase the level of investment in SMEs across Australia;
- Facilitate interstate and overseas trade and commerce; and
- Support job creation and economic growth in response to the current COVID downturn.
All investment decisions will be made independently of the Government. They must be commercially viable and make an appropriate return.
There will be an industry and regional spread of investments.
The Government, ANZ, CBA, NAB and Westpac have all committed $100 mn each in equity funding to SMEs through the BGF. HSBC and Macquarie have also committed $20 mn each to the BGF.
“Equity funding provided at the critical scale-up stage will enable more Australian SMEs to pursue new opportunities, expand and fulfil their potential,” said Guil Lima, Chief Executive Business Division of the Westpac Group.
“These businesses are our future, and we look forward to seeing the impact these funds have as business owners make the most of the opportunities in their markets.”
Matt Comyn, CEO of CBA, similarly welcomed the establishment of the BGF in a media statement released today.
“We are strong supporters of the Fund and believe it can make a real difference to help businesses achieve their full potential.
“The success of similar funds in Canada and the United Kingdom makes it clear that this model of support can provide a powerful boost for small businesses with the potential to deliver big impacts and help them grow and prosper into the future. We look forward to playing our part in the fund’s work.”
The BGF already has $540 mn in initial investment capital however has ambitions to grow to $1 bn.