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State-backed BGF seals first Midlands investment

9 Feb 2012

Business Growth Fund (BGF), the £2.5bn state vehicle established to target UK SMEs, has sealed its first Midlands investment in GCI Telecom Group (GCI Com), an independent telecoms and data services provider.

BGF has invested £10m of equity capital to support GCI Com’s organic growth and active acquisition strategy, in return for a minority stake in the company.

Headquartered in Lincoln, England, GCI Com has a turnover of nearly £65m and employs 220 staff across nine UK locations. The group was formed in 2000 and has since grown rapidly, through a mix of organic growth and 19 strategic acquisitions. Today, it is one of the fastest growing managed communication providers in the UK with a 68 per cent CAGR over the last two years.

GCI Com services the fast-growing and converging data services and communications markets. It provides inbound and outbound telephony and data services to medium sized corporates and smaller enterprise customers on a national basis.

The telecoms and IT services markets, in which GCI Com operates, are forecast to grow at between five per cent and 50 per cent as a result of the increased drive to outsourcing of infrastructure, services and software, particularly in the mid-size corporate sector.

Richard Bishop, BGF head of investments, said, “GCI Com is the first investment that BGF has made in the Midlands. We believe that there are many high quality businesses across the Midlands, like GCI Com, which have real potential but which have not obtained the funding that they need, and we therefore expect this to be the first of many BGF investments in the region.

“With capital at our disposal, we have the means to significantly expand the market for investment in small and medium sized businesses.This was an off market deal sourced by our Birmingham based team – Wayne [Martin, group CEO] and his team were not originally looking for equity investment. However, we are able to contribute more than financing alone and this made our offer compelling.”

BGF recently joined European technology investor Amadeus Capital Partners and Dutch venture firm Van den Ende & Deitmers in a $25m financing round for Unruly, one of the world’s fastest growing social video distribution companies.

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