The Scottish Co-investment Fund

 

The Scottish Co-investment Fund (SCF) is a market driven, highly innovative service aimed at substantially increasing the number of and capacity for investment of private sector investors active in the Scottish early-stage business market.

Traditional public involvement in private equity, through investment in limited partnerships, carries the risk of displacing the private sector. The SCF differs by working with the existing formal and informal private equity investor base, involving them in the process rather than excluding them.

How the fund works

through the SCF, Scottish Enterprise provides equity funding to SMEs on a (purely commercial) co-investment basis with selected co-investment partners. To achieve this, we reach co-investment manager's agreements with private sector partners. Each co-investment partner is allocated an amount of co-investment funds available for use in individual investments.

The role of SCF partners

The partner finds the investment opportunity, negotiates the investment deal and invests their own cash together with SCF money on equal terms.

There's a list of Scottish co-investment fund partners on the Scottish Enterprise website..

The SCF does not:

• find and negotiate investment deals on its own; or
• take any part in deciding whether the company is a good opportunity, or has been valued at the right level. So long as the business passes basic criteria (largely size, location and sector) the Partner is the one who will make the investment decision.

This means that private sector investors can bring more cash to deals, and spend less time finding that cash. It also means that SCF will share the risk of making an investment. After the deal is closed the SCF does not become involved in post-deal monitoring or decisions.

Again, the partner is responsible for monitoring and control of the investment. On deal completion and at the partners behest, Scottish Enterprise can assign an account manager (no cost to investee company or partner) to help the investee company realise their growth plans.

Who is eligible?

SCF will strike agreements with co-investment partners who are able to demonstrate a track record, and have strong commitment and the motivation to handle early stage 'hands-on' investments.

Investors can be:

• corporate ventures;
• institutional investors;
• professional fund managers;
• smaller unregulated fund managers and investors;
• business angels syndicates; and
• private individual investors.

SCF will co-invest with existing funds and investors as well as new funds to be established, and new investors to the Scottish market.

You can download further information about this fund at: Co-investment pages on the Scottish Enterprise website.