22 Jun 2016
Fund boss: "Potential in Aberdeen is greater" following oil crisis
The chief executive of the UK's Business Growth Fund has said it plans to ramp up activity in Aberdeen - where it believes the potential for new business to flourish has increased despite the oil crisis.
Stephen Welton, who leads the £2.5billion bank-backed investment fund, believes it can make a significant impact in Scotland, where just 16% of its investments to date have taken place.
Speaking to The Herald, Mr Welton said he believes now is a good time to continue investing in the oil and gas sector in the north-east of Scotland, even with current market conditions.
Challenges
The crude price plunge has posed big challenges for firms in the oil services sector, in which the fund has invested heavily.
Mr Welton said oil services firms may be in survival mode but those that keep investing in their core businesses and retain key staff will prosper when the market recovers.
“The opportunity for us is to look through the cycle, because it will go up and down,” he said.
“I actually think in the next five years the potential in Aberdeen is greater than it was.”
The former JP Morgan private equity executive believes the fund could play an important part in helping the North Sea industry fight back by using new technologies to boost efficiency.
It is working on a plan to link its investment expertise with the operational know how of oil and gas firms and entrepreneurs to help maximise the potential of small companies with interesting technology.
“This is a highly innovative venture we are looking at which is really combining with some industry experts and some operators from the oil and gas sector to see if we can collaborate in a more formal way to try and identify and to commercialise some of these early stage businesses,” explained Mr Welton.
“I hope that’s something that could come to fruition in the next month or so, it’s quite advanced.”
Help with investment
The fund - which was launched by banking giants including Royal Bank of Scotland and Lloyds amid claims that lenders were not doing enough to support small businesses - has invested £135million in 17 Scottish firms to date.
Ritchie Whyte, a Corporate and Business Advisory Partner at Aberdein Considine, has helped bring investment into businesses via the fund and others like it
He said agrees with Mr Welton's comments.
"The decline in oil price has changed the market in Aberdeen and Aberdeenshire," he said.
"However, this has created new opportunities for many businesses which, with the right investment, could now grow and create new jobs.
"What Mr Welton says is true - there is great potential for many businesses in Aberdeen and the surrounding area to grow over the next couple of years.
"However, to do so, many of these firms will require funding, whether that be from a bank, fund or third party investor.
"Increased support from the Business Growth Fund will help more of these companies realise their potential."
SME support
Aberdein Considine offers a full legal service the small and medium-sized businesses across Scotland.
We advise growing SMEs and investors across Scotland on a variety of debt and equity funding deals.
If you would like to speak to Ritchie or a member of the Corporate team, please call 0330 3344 333 or click here.