Here we feature the latest equity deals in Welsh business
A Monmouthshire veterinary practice has become the first in Wales to become a employee-owned business.
Archway Veterinary Centre, which has branches in Chepstow and Caldicot, is now owned by its 26 staff through an employee ownership trust (EOT). Andrea Reynolds, who has been one of the directors of the business since 2011 – taking over sole interest in the small animal practice in 2014 - has sold her interest in the business.
The value of the deal has not been disclosed. Ms Reynolds will remain at Archway as one of three clinical directors, while there are also three trustee directors, including John McEwan who originally established the practice, before retiring.
Ms Reynolds who graduated as a vet in 1996 and worked around the UK and Australia before settling in Chepstow, said: “In South Wales, a large number of Veterinary Practices have been taken over by corporates and I was becoming increasingly concerned that a monopoly of these companies and private equity firms buying out small independent practices was affecting our industry, and those linked with it
“Therefore, when I was considering the future of the practice, I was adamant that Archway would and should remain independent long after my stewardship ends.
“I have always been aware that the success of a Veterinary practice depends on all of the staff who work there, and I believe the employee ownership model recognises and rewards each staff member’s contribution and gives them a voice in the future of the business. That’s why it was the perfect way for me to pass on the practice knowing it is and will remain with people that I know and trust.”
She was advised on the transition by Social Business Wales, which is delivered by Cwmpas, the new name for the Wales Co-operative Centre. Capital Law acted on behalf of the company on the EOT.
Derek Walker, the outgoing chief executive of Cwmpas, which delivers Social Business Wales, said: “To have a business such as a veterinary practice go into EOT just shows the flexibility and benefits of employee ownership rather than selling a business to a third party and we are proud to have supported Archway into being the first to do so in Wales.
“Succession planning is a very difficult thing to navigate and Andrea has recognised that by selling her practice to her colleagues via an EOT means that her beloved business will remain independent and that she can also remain working there.”
Newly appointed Director at Archway Veterinary Centre, Eleanor Gough, said: “Our team is unreservedly dedicated to promoting animal health and welfare. Becoming an EOT has meant we are able to stay true to ourselves and to protect the core ethos of our practice for years to come.
“I could not ask for a better team to take Archway Veterinary Centre towards a bright new future.”
Finalrentals
Global online car rental software venture, Finalrentals, has secured a six-figure equity investment to support is growth plans.
The Penarth-based start-up has been backed by a syndicate of four business angels led by lead investor Eamon Tuhami and venture capital company Fuel Ventures. The investment has been matched by the Development Bank of Wales through its Wales Angel Co-Investment Fund.
Based at Tec Marin, Finalrentals is the brainchild of Ammar Akhtar who is originally from Pakistan but relocated to the UK from Poland with an Innovator Visa as part of the UK Government’s Global Entrepreneur Programme.
He then took part in FinTech Wales’ Foundry – the no equity accelerator programme that provides mentorship and support to help incubate, accelerate and scale start-up businesses in Wales. With a background in technology building car rental software and websites, Ammar established Finalrentals in Dubai in 2019.
Employing a team of eight, half of which are female, its innovative car rental platform is now used by local car rental businesses throughout the world including Canada, the United States of America and United Arab Emirates.
Mr Akhtar, founder and chief executive of Finalrentals said: “From Pakistan to Dubai then Poland to Cardiff, this has been a three year journey that started in my home garage fondly known as the ‘Gar-Office’.
“Over half of the global car rental industry is made up of local car rental companies who are great at customer service but know little about e-commerce.
“I knew from my experience of working for companies like Thrifty, Dollar and Payless that there was a great opportunity to develop an innovative car rental platform that could be accessible to local providers.
“We have worked tirelessly to build the software and get our product known in the market but taking part in the Fintech Wales programme was the catalyst for growth.
“It gave us a great opportunity to network with the investor community in Wales and benefit from mentorship which has ultimately led to us being able to secure this major investment that will enable us to now scale the business. There is certainly a culture of innovation and growth in Wales and I’m now proud to call Cardiff my home.”
Lead investor and founder of Hwyl Ventures Mr Tuhami said: “I was surprised to learn that 52% of the world’s car rental companies are small businesses who struggle to take and make orders online.
“Ammar and his team have built an innovative platform which has global reach and is already making a difference.
“It’s been a pleasure to connect him into the ecosystem, see him part of the FinTech Wales Foundry program and introduce him to other angels and funds. I warmly welcome him and his family to Wales and believe that this is just the beginning of something very exciting.”
Tom Preene, operations manager for Angels Invest Wales, added: “As the biggest angel network in Wales, we connect experienced investors with Welsh businesses seeking private investment.
“Led by experienced investor and business angel Eamon, this particular syndicate will bring real firepower to Finalrentals as one of the world’s best-in-class web applications for car rental providers.
“We are also pleased to welcome the support of Fuel Ventures.”
IQ Endoscopes
Medical devices firm IQ Endoscopes has secured a £5.2m equity investment to support expansion plans.
The investment into the Chepstow-based firm has been led by BGF (previously known as the Business Growth Fund) with existing investor Development Bank of Wales also participating in the round alongside a consortium of investors.
IQ Endoscopes has created a sustainable and single-use endoscopy device. The company was recently supported with grant from Cardiff and Vale Health Board, and received backing from the Cardiff Capital Region Challenge Fund to create a new recycling strategy for the product
IQ Endoscopes’ technology leverages the complementary experience of its founders; Dr Patrick Ward-Booth brings over 40 years of clinical experience in the endoscopy field, while chief technology officer Andrew Miller has a background in automotive engineering that has been applied to the design and manufacturing of the company’s products.
The business, which was launched in 2017 has raised £5.9m to date, with seed funding and subsequent investment raised from investors including the Development Bank of Wales. IQ Endoscopes has undergone rapid acceleration over the last five years and funds from this latest round will be focused on market access strategy ahead of product launch.
Global volumes of endoscopy procedures are forecast to grow to 130 million by 2026, driven by factors such as an ageing population combined with a growing number of surgical techniques that can now be performed via endoscopy. New guidance recommending increased early screening for diseases such as colorectal cancer (to begin at age 45 rather than age 50) has also come at a time when the effects of the pandemic are still being felt in the form of a significant backlog of patients waiting for endoscopy care.
Of the 70 million endoscopy procedures currently completed each year, 98% are performed with reusable devices which require decontamination and reprocessing after each use, which is both costly and reduces patient capacity, as well as posing the risk of cross contamination. IQ Endoscopes aims to add much needed capacity and flexibility to help the healthcare system meet patient demand.
Matt Ginn, chief executive at IQ Endoscopes said:“Regulatory bodies such as the FDA are increasingly encouraging single use endoscopes as a means of improving patient safety and ensuring the early detection of GI diseases. Single use endoscopes not only eliminate all threat of cross contamination between procedures, but also increase throughput of patients and allow greater access to treatment on a global scale.”
“This latest financial backing will allow us to bring our disruptive technology to market, making it available to patients undergoing vital treatments and procedures as soon as possible. Furthermore, we can continue our organisational expansion in South Wales and ensure we scale the organisation in line with commercialisation plans”
Tim Rea, investor at BGF, said: “This was an exciting opportunity to back an early-stage medical device business with a truly innovative technology that has the potential to make a significant positive impact on a strained area of the healthcare system.
“The team at IQ Endoscopes are extremely committed to improving outcomes for patients and healthcare providers the world over. This investment will enable IQ Endoscopes to complete its remaining developmental milestones against a clear roadmap towards its next stage of growth.”
The investment brings BGF’s investments in Wales to five. Other current investments include those into Swansea-based Character.com and Ammanford firm Victorian Sliders.
Dr Richard Thompson, senior investment executive at the Development Bank of Wales, said: “Matt Ginn and the team at IQ Endoscopes have made impressive progress. As a PhD materials scientist, I’ve been particularly impressed at the quality of the products the team has developed.
“As an initial investor into IQ Endoscopes, we’re delighted to see the progress they’ve made, and to have made a second med-tech equity co-investment with the ventures team at BGF, increasing our stake in this exciting company.”
British Business Bank
A new £130m fund to back the growth of Welsh firms from the British Business Bank will be operational this autumn, says its chief executive.
Louis Taylor, who heads up the UK’s Government economic development bank, also confirmed that a competitive tendering process for those seeking to manage what will be debt and equity pots within the fund will be launched in March.
The Welsh fund was first announced by Rishi Sunak, then as chancellor, in the 2021 Autumn Statement.
While still to be finalised, the fund is expected to have a similar profile to a new fund for the south-west of England from the British Business Bank, with micro-loans up to £100,000, another for debt funding up to £2m and then an equity investment element.
The equity component in the south-west fund will allow investments per deal up to £5m. Also to be decided is whether the fund will have a regional dimension or be solely Wales-wide.
For example, if regional this could see on its equity pot an element being ring-fenced for North Wales.
If the case it is still to be determined whether fund managers would be asked to bid for regional elements, or for one contract setting out investment targets region by region in Wales.
While the precise split between what will be debt and equity in the £130m fund has also to be finalised, equity is expected to feature significantly.
On a visit to Wales, Mr Taylor said: “We are delighted there is not only a Wales fund, but for the two other devolved nations and some other regions of the UK as well. We have proved the value of regional funds through our existing Northern Powerhouse Fund, which is almost fully invested, and the Midlands Engine as well. When the Welsh fund was announced there was a total of £1.6bn for all of these new funds.
“We have already launched a request for proposals on the south-west fund and in Scotland too. We will launch the process here in Wales with a request for proposals from fund managers in March and anticipate the fund (all elements) to be operational and starting to distribute money in early autumn.
The £130m will be invested over a five-year period.
Read More: New £50m equity fund for the Cardiff Capital Region
Mr Taylor, who was previously chief executive of UK Export Finance, said the finance for the Welsh fund – and the bank’s other new geographically specific funds across the UK – would not impact on the funding availability from the British Business Bank’s other funding pots, including its successful Start-Up Loans scheme. He added: “There is no cut back as this is solely incremental.”
He said the fund was being deliberately designed to have an impact on Wales.
The chief executive added: “It is important on structure that the whole of Wales benefits from this money, so it is not going to be just a single fund managed by a single fund manager and then say it all being allocated to Cardiff. So, it is likely to be split up. While the likelihood is that more money will go to equity than debt.
“We already have an idea on where we want to go, but there are a few more parties we need to consult with, including the Welsh Government, as they should have a say in what is needed as well.
“All of those perspectives will be taken into account when we allocate the funding, but by the time we get to March it will be very clear on what we are asking bids on, so regionally and on equity and debt.”
Abigail's
A day nursery in Caerphilly has become what is thought to be the first business of its kind in the UK to be taken over by its own employees.
Abigail’s was jointly founded by Abigail Jones and her father Michael Donovan in 2013 and currently looks after 65 children while their parents are at work.
The business employs 25 members of staff. Under the new arrangements, all members of staff become co-owners of the business once they have successfully got through their probationary period of a month.
Mr Donovan said the idea of establishing an employee 0wnership Trust (EOT) along the lines of the John Lewis Partnership had cropped up during a discussion with the firm’s accountant.
“We’ve always been very fortunate with the staff we’ve taken on. They do a fantastic job and we have tried to pay them as much as we can afford. We were thinking about how we could do more for them and when we were told the details of EOT decided it was the right thing to do.
“As co-owners of the business, the staff share the profits and are able to get a tax-free bonus of up to £3,000.”
Mr Donovan said he had initially had some qualms about giving up the power and control of exclusive ownership, but had come to the conclusion it was definitely a good move. He added: “I’m a socialist and believe staff should have a genuine stake in the company they work for. There’s been too much ‘them and us’ in the workplace in Britain and we should learn from other countries.
“We’ve always had a committed workforce, so I don’t think the business will get any more out of them than it has already. But they will get a better reward and that has to be a good thing.”
He said the idea had gone down well with staff members.
“The reaction has been very positive, but I don’t think it will be fully understood until the dividend payments come through later in the year.”
Mr Donovan said a number of EOTs had been established in other industries in Wales, though none in the nursery sector.
He added: “We also haven’t been able to find a nursery that’s converted to EOT anywhere else in the UK, so it looks like we’re the first. I would encourage any business to explore the possibility of doing what we’ve done.”
Steve Griffiths, managing partner of accountants DWA, who provided advice on the benefits of the EOT, said: We have worked closely with Abigail’s for a number of years and know how critical their team are to the quality of service.
“The benefits of an EOT to employees are really significant. EOTs encourage their involvement and going forward will positively affect retention and recruitment, as Abigail’s becomes the local employer of choice within the nursery sector.
Jeffrey Ross
Jeffrey Ross, one of Cardiff’s leading independent sales and lettings agents, has bought ACJ Sales and Lettings in Penarth.
Jeffrey Ross has acquired the 30-year-old family business from its founder Anthony Jones in a deal which will see all 12 staff members at ACJ retained.
The companies’ services will merge, where clients of both businesses will benefit from 50 years of combined expertise gained in the south Wales property market.
This is the second buy out Jeffrey Ross has completed in recent years, following its acquisition of Seel and Co, one of Wales’ oldest auction houses, in 2019.
Ross Hooper Nash, managing director of Jeffrey Ross – which has four branches across Cardiff - said of the acquisition: “We have been looking for a long time for the right business to invest in, and ACJ presented the perfect opportunity for us to grow our customer base in the Vale of Glamorgan. Jeffrey Ross is a family business and we were really attracted to that family ethos that Tony has fostered at ACJ, we knew that it would be a good fit with our own values and that the two companies would complement each other perfectly.”
Mr Hooper Nash said: “Tony has built a great team at ACJ and its expertise and foothold in both the lettings and sales side in the Vale is really important to us, and we are excited to learn more about the area from the team.”
Mr Jones, who has now retired from ACJ, said of the acquisition: “I have known Ross for a long time and have a lot of respect for the business that he has built in Jeffrey Ross. When he came to me with his proposal to buy us out I could see the synergies between the businesses, as well as the enhanced service our current customers would get from also having the Jeffrey Ross team working for them too, which is an attractive offering.
“I want to thank my team for all their hard work and support over the past 30 years and look forward to seeing the merged company go from strength to strength.”
ACJ Lettings and Properties employs 12 people and is based in Royal Buildings on Victoria Road in Penarth. Jeffrey Ross has four branches in Pontcanna, Roath, Cathays and Llanishen in Cardiff. Seel and Co is also based out of its headquarters in Pontcanna. Jeffrey Ross and Seel and Co have around 56 employees.
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