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11th February 2009
CAT.180
CATAPULT PLEDGES TO CONTINUE BACKING GOOD BUSINESSES IN THE DOWNTURN
Whilst the prevailing economic conditions are undeniably tough Catapult Venture Managers will continue to invest in good businesses throughout 2009.
Managing Director Rob Carroll says that whilst the banks have pulled back from new lending there are still funds available in the Midlands to support SMEs and that Catapult continues to have a pipeline of investment opportunities, albeit on a smaller scale from last year.
He commented: “Catapult is very definitely open for business and our £30m Catapult Growth Fund, which was launched in early 2007, has already invested £5.8m into businesses primarily in the Midlands region (but not exclusively) and can provide funding for up to £2m of development capital or finance for MBO’s and BIMBO’s.
“We are looking to invest in economically robust businesses. This includes enterprises that are currently finding themselves with rather too much exposure to debt and would benefit from reducing this by way of an equity stake. Catapult continues to have a pipeline of prospects
Catapult Venture Managers enjoyed a record breaking year in 2008, bucking the gloomy economic outlook in the second half of the year and the credit crunch.
“The economy may not be in great shape but we continue to invest in well run businesses and our doors are well and truly open for business. Catapult enjoyed its most buoyant third quarter ever completing eleven transactions during this period.
“Our transactions during 2008 have included the multi-million pound buyout of BWB Consulting Ltd, a significant development capital investment into e-learning specialist AtlanticLink Limited; and an early stage investment into CellAura Technologies Ltd.
Among our other investments was the BIMBO of Sight and Sound Technology in Northampton: one of the UK’s leading suppliers of IT products and services for people who are blind, visually impaired or have learning difficulties.
“The second half of 2008 saw a general slide in the well-being of the UK economy and this had a major impact on confidence However, we continued to invest including £850k into Key Technologies as part of £1.8m being raised through flotation on virtual trading platform Investbx.
“Clearly 2009 is appearing gloomier than ever with Gordon Brown’s close ally Ed Balls, the Children's and Schools Secretary, saying this week that the downturn was likely to be the most serious for 100 years.
“In such circumstances both individuals and organisations are going to be more averse to risk, but we are continuing to work with banks that are still prepared to lend.
“Catapult continues to back businesses with good management teams and we are prepared – as the banks pull in their lending ‘horns’ - to increase our investment where appropriate.
“More than ever, companies need to be realistic when it comes to pricing. In these turbulent economic waters, companies need to have well structured finances in order to attract finance. Businesses burdened with too much debt are unlikely to be successful.
“Now, when conducting a ‘sensitivity’ analysis, instead of looking at what impact a fall of 10% in turnover would have on a business, we are basing our calculations on nearer 30%. Businesses need to be more robust in order to withstand greater shocks.
“Looking to the general state of the marketplace it is clear that the economic outlook is tough and it’s looking increasingly difficult to predict when the situation is likely to improve. Clearly, investors are currently more cautious, but well managed businesses with a clear workable business plan should always be able to attract funding,” he said.
Catapult Investment Director Ray Harris added: “Most people may be surprised by the size of the transactions that Catapult is getting involved in. The Key Technologies, BWB and Sight & Sound deals go to show that with equity available of up to £2m available, we are able to provide meaningful levels of equity to larger businesses than is historically associated with our funds.
“Our strong deal flow and completion levels also show that we continue to invest at a time when other equity players are being more reserved. Delivery is the key buzzword in the market at the minute and that's exactly what we are doing."
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For further information please contact Rob Carroll at Catapult Venture Managers on 0116 238 8200 or 07976 226252 or Paul Shrimpton at PSPR Ltd on 0121 354 7311 or 07979 505322
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