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Australian Business Growth Fund (ABGF)
What is the ABGF?
The ABGF is an independent initiative designed to provide equity support to growing Australian-owned trading businesses.
Established in 2020, the fund comprises seed investment of $540M from the four major banks plus Macquarie and HSBC.
A Two-Fold Purpose
In essence, the fund provides a bridge between senior debt and late-stage venture capital. It is ideal for businesses that need expansion capital beyond responsible debt ceilings, but want support that is not overly intrusive or expensive to access.
The fund mirrors successful overseas models to provide support for entrepreneurial and innovation activity in Australia.
Eligible Businesses
The parameters for investment are relatively broad and industry agnostic, with key criteria that includes:
- Operating Revenue between $2 - $100 Million
- Australian headquarters
- Have a demonstrable, unique proposition and growth potential
- Must be an established business, not a start-up enterprise
How the Fund Works
The ABGF operates in a minority equity capacity, that includes:
- Equity stake of up to 49% (lower thresholds generally preferred)
- Initial investment of between $5 - $15 Million
- A position on the Board of Directors
After submitting an application, the full investment process takes 8-10 weeks. The focus is on supporting active trading businesses, and excludes straight asset investment or speculative ventures (e.g. real estate, mining, etc).
How much does it cost?
For the business owners, there is a very material cost in terms of relinquishing a portion of equity in a successful business. Most owners will not enter into this position lightly and will consider the opportunity cost of continuing on with other sources of capital.
This said, there are some attractive potential benefits that include:
- De-risking from the rising cost of debt and increasing bank covenants
- An expectation of a Return on Equity that sits at a significant discount to other external investment options
Since its launch in 2020, there have been several transactions completed, and the fund has an appetite for more opportunities. Businesses have accessed the fund to expand operations overseas, launch new products, finance acquisitions, and as part of proactive succession planning. Success Stories and additional data are available on the ABGF website.
Our range of digital Business Guides may offer support for businesses considering the scheme of other commercial finance options.
Contact MCP
1300 510 816 or your Finance Partner
enquiry@mcpfinancial.com.au