The British Business Bank’s Strategic Investment in FPE Capital’s Fund IV
In a significant move to bolster the growth of small businesses in the UK and Ireland, the British Business Bank (BBB) has announced a cornerstone commitment of €46 million (£40 million) to FPE Capital’s Fund IV. This investment is aimed at supporting high-growth companies poised to scale, particularly those in the critical B2B software, data, and software services sectors.
Building on Previous Success
This latest commitment builds on BBB’s prior investment of €23 million (£20 million) in EPF Fund II back in 2017. The new commitment to Fund IV is part of a first close that notably surpasses the total size of its predecessor fund, marking a significant step forward in support for mid-sized enterprises.
Closing the Funding Gap
Adam Kelly, Managing Director and Co-Head of Funds at the British Business Bank, underscored the importance of this initiative: “There is a significant funding gap in the lower middle market, particularly for small businesses that have moved beyond seed funding. FPE is addressing this gap by providing flexible solutions for businesses at a critical stage of their growth journey. By supporting businesses like FPE through our expanded mandate, the Bank is increasing the supply of capital available to UK businesses ready to move into their next phase of growth.”
Government Support for Ambitious SMEs
Blair McDougall, the Minister for Small Business and Economic Transformation, added: “Through our modern industrial strategy, we are unlocking the investment that high-growth businesses need to thrive and compete in the UK. This support is focused on the most ambitious SMEs in key sectors, enabling them to grow, create high-quality jobs, drive growth, and improve living standards across the UK.”
FPE’s Focus on Founders
Founded in 2016, FPE is a specialist private equity investor concentrating on B2B software, data, and software services businesses. The firm typically invests in companies based in the UK and Ireland with an enterprise value ranging from €11 million (£10 million) to €86 million (£75 million). This fund will continue to target founder-led companies, often serving as their first institutional investor.
Aligning with the Government’s Industrial Strategy
Today’s commitment is part of BBB’s growth capital strategy. This expanded mandate allows them to invest in mid-sized and smaller private equity funds that support small businesses aligned with the government’s eight industrial strategy sectors driving growth.
According to the BBB, their core programs support €26 billion (£23 billion) of funding for almost 64,000 small businesses. Operating on a fully commercial basis, the growth capital strategy aims to attract additional private capital to unlock expansion funding for UK businesses and strengthen regional growth in key sectors of the economy.
Driving Economic Growth
Richard Coldwell, Investment Director, Funds, British Business Bank, highlighted the strategic importance of this investment: “FPE is a specialist growth investor with a strong track record in developing software, data, and software services businesses in the UK. The bank’s commitment will ensure growth capital is channeled into high-potential businesses entering the next stage of their growth journey. Focusing on the digital and technology sectors, as well as professional and business services within the Industrial Strategy, FPE will help create high-value jobs and drive economic growth across the UK.”
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