Private Equity in lockdown – how has the industry fared?
The wider global economy has suffered considerably through the Coronavirus pandemic. Sector by sector, however, there have undoubtedly been areas that have capitalised on this period while others have struggled.
The travel industry and the hospitality arena have come almost to a halt while innovation in retail and health have become more important than ever before.
Private equity investment has been one of the only areas able or willing to provide growth finance to businesses looking to grow during lockdown. It is also a sector that has provided vital survival finance to firms unable to access any government support.
IW Capital – a leading SME investment firm – has funded over 40 growing small businesses since 2011, including Borrow my Doggy and Brewhouse and Kitchen. In the past few months they have supported a number of businesses looking to grow through lockdown as firms from a variety of sectors carry on with – or alter – their plans.
Luke Davis, CEO of IW Capital and private equity expert, discusses the what the last two months has meant for private equity and small businesses:
“This period has been incredibly difficult for businesses up and down the country but for those looking to grow and expand it has meant a huge reduction in the amount of available finance – something that even previously was not widely available. It has, however, highlighted the importance of effective planning and risk management in a business. While no one could have prepared for this period, ultimately, the firms that have survived are the ones that were best prepared for disruption and had sound underlying propositions.
As private finance providers, we have a responsibility to not only support growing businesses that are seeing this period as an opportunity but also businesses in industries that may be struggling and that are unable to access government support.
State-sponsored initiatives and infrastructure investment will be key to giving businesses confidence but the majority of funding is likely to come from private sources. And given that bank lending to SMEs remains a key issue limiting growth, private equity through schemes such as the EIS will be crucial to unlocking the growth potential of these firms.”
Case studies
This has recently been highlighted by IW Capital’s £2m investment into online doctor service GPDQ, an innovative solution working closely with the NHS to help cope with the strain on doctors during the Coronavirus crisis. The raise – completed in April 2020 – was massively oversubscribed by IW Capital’s investor base as they looked to back the firm, even in spite of widespread reluctance in the wider investment market.
IW Capital and its founder Luke Davis have also invested in a beachfront pub development project in Hove – of which Luke is a resident – raising over £2m to redevelop a well-known landmark in the area into a new community hub now to be known as Rockwater Hove. The investment was also open to local residents and to date has received tremendous support from the local community, both from the public and the council.
One of the areas having an impact in this period is the retail technology sector. Supermarkets and shops have come under immense pressure to adapt quickly to protect shoppers and employees alike. Ubamarket – one of IW Capital’s portfolio companies – provides innovative Scan and Go app technology to eliminate the need to use checkouts when paying for the weekly shop.
