The number of firms in Wales in which the UK Government has ownership stakes, through its Covid response £1.1bn Future Fund, has risen to 10. The latest firm to agree a debt to equity conversion under fund, so giving the UK Government an undisclosed small majority stake, is Port Talbot-based, Hexigone Inhibitors.
Hexigone is addressing a multi-trillion-pound global problem with its micro-reservoir technology that is added to paints and protective coatings to prevent corrosion.
With applications across a wide range of industries including construction, oil and gas, marine and aerospace, Hexigone’s products help to reduce corrosion damage. It has completed multiple international deals in India, USA, Asia and South America.
Next read: The £50m equity fund for the Cardiff Capital Region.
The Future Fund also has a less than 3% stake in Llangennech-based cleantech venture Hydro Industries as well as equity in Swansea-based medical devices firm Calon Cardio Technology and Cardiff-based digital financial inclusion venture Pockit. It also has a less the 3% in Alternative Investment Market listed home-testing healthcare firm MyHealthChecked.
Its ownership interest came as a result of MyHealthChecked’s acquisition of Nell Health last year for £1.5m with the vast majority satisfied through the issuing of new shares. Nell had been backed by the Future Fund and had seen its debt being converted into equity before it was acquired. As a result of its acquisition this has gave the Treasury a share interest in the Cardiff-based firm.
The other Welsh firms where debt has been converted into equity for the UK Government are Denbigh-based LGN Innovations, Cardiff firms We Build Bots, Momentum Bioscience and Delio, as we as well Powys- vehicle pioneer Riversimple.
The fully invested debt to equity fund managed by the UK Government’s economic development bank the British Business Bank, now has an equity stake in 400 firms in the UK - a third of the total firms backed. The British Business Bank said it couldn’t disclose the total value of its equity investments in the ten Welsh firms.
In total 1,190 UK firms received funding with 25 recipients in Wales, who drew down a combined lending value of £18.7m. Firms in London dominated the fund with more than 600 companies sharing around 64% of the total funding at £646.8m. When adding to the south-east of England the number of firms swelled to more than 700 and on value to just over £777m of the total.
Ken Cooper, managing director, venture Solutions, British Business Bank said: “The Future Fund was created to ensure a flow of capital, at the height of the pandemic, to companies that would otherwise have been unable to access government support schemes, while ensuring long-term value for the UK taxpayer.
We are pleased to see so many of those companies now going on to raise further private sector capital, which will allow the Future Fund to benefit from their continued growth.”
Latest figures show that 55 firms financed by the fund have fallen into administration. On anticipated high default levels, a spokesman for the British Business Bank, said: “Due to the early stage nature of venture capital investments, write-offs are relatively high, with financial returns driven by a number of high performing outlier companies.”
Under the Future Fund firms needed to have raised £250,000 in a previous equity round. It provided funding up to £5m.
When debt is converted into equity the UK Government gets a stake at a 25% discount to the required match funding investors.
Next Reads:
