Sir Philip Green has lent his backing to a fund which has at least £250m to invest in taking minority stakes in struggling retail businesses.
A small multiple fashion retailer looks set to be among the first to benefit from The Business Growth Fund, which has been set up by five of the UK’s biggest banks to take equity stakes in businesses which might not be able to invest for growth because of operational or financial challenges.
The fund – which is chaired by former Boots chairman Sir Nigel Rudd – aims to invest a total of £2.5bn and chief executive Stephen Welton said he expected to invest at least 10% of this pot of cash in retail businesses and suppliers to retail.
Welton stressed the initiative was not about supporting those businesses which have failed business models, but rather helping “good businesses with bad balance sheets”.
He confirmed it is talking to an as yet unnamed small multiple fashion retailer, and said suppliers were also a target. “It’s about getting them to raise their heads above the day-to-day firefighting,” he added.
Although he has no formal involvement with the fund, Arcadia boss Green enthusiastically backed the venture, saying it would help smaller retailers and suppliers benefit from investment while still retaining control of their companies.
“I think small companies have always found difficulty in finding funding when they want to sell a minority stake to help them grow,” said Green. “It is unusual for that funding to be available for retailers and the supply chain, so it is a welcome thing.”
Welton said the companies the fund is targeting are those with turnovers of £5m to £50m, but it would “definitely talk to” larger companies with sales of up to £100m. The typical investment would be between £2m and £10m.
“We’re trying to reach out to a lot of small companies in retail and in the supply chain who are struggling and concentrating on day-to-day survival, and therefore by default are not looking to the future,” said Welton.
Green urged businesses which might be eligible for the funding to get in touch.