Investec plans new €75m venture capital fund for high-growth Irish companies

South African bank hopes to have new funds in place by the end of this year

Emer McGovern, CFO of Fenergo, and chief executive Marc Murphy pictured at the announcement of 200 new jobs in March. The Ulster Bank Diageo fund made an €11.4m profit by selling its stake in the business in 2015. Photograph: Dara Mac Dónaill / The Irish Times

Emer McGovern, CFO of Fenergo, and chief executive Marc Murphy pictured at the announcement of 200 new jobs in March. The Ulster Bank Diageo fund made an €11.4m profit by selling its stake in the business in 2015. Photograph: Dara Mac Dónaill / The Irish Times

 

South African bank Investec is planning to put together a new €75 million venture capital fund to support early-stage, high-growth Irish companies.

This would be a successor to the Ulster Bank Diageo Venture Fund Limited Partnership, which it set up in October 2008 and is due to wind down its activities next year.

“We have support and will raise the [new] fund,” said Michael Murphy, managing partner of Investec’s venture capital activities. “We’d love to have it nailed down within six months.”

The Ulster Bank Diageo fund secured commitments of €75 million from its investors, of which €70 million had been drawn down by March of this year.

It is not clear if Ulster Bank or Diageo will support the new fund but Investec plans to seek investment from Enterprise Ireland and the Ireland Strategic Investment Funds.

Accounts just filed for the Ulster Bank Diageo fund show that it made a profit of €15 million on the disposal of investments last year, up from €13 million in 2015.

It made a€14.8 million profit on the disposal of its holding in Brite:bill Ltd to Amdocs Astrum Ltd, having invested €2.5 million for a 31.9 per cent shareholding. Amdocs acquired 100 per cent of Brite:bill for €73 million.

In 2016, it made an €11.4 million profit on its 19.8 per cent stake in Fenergo. The fund had invested €3.5 million in the business in 2013, and it was sold to Insight Venture Partners with an equity value of €85 million.

The fund achieved four “highly profitable” exits in the past 24 months. This included €7.33 million for its 22.7 per cent shareholding in Helix Health Group Ltd, following its sale to Ely Global in September 2014. The fund had invested €5 million in the business in April 2011.

It also reduced its stake in Advanced Manufacturing Control Systems Ltd to 5.25 per cent, realising €3.6 million, generating a 2.9 times cash return.

However, the accounts noted the “uncertainty” around its investment in Irish mobile data provider Zamano plc, following the company’s decision earlier this year to wind down its existing business lines. The fund invested €2.5 million in Zamano for a 13.97 per cent stake.

Investments in the fund have ranged from €500,000 to €5 million, with 20 high-growth Irish companies backed across a range of sectors, including telecoms, social media, cloud computing, data storage and healthcare. Between them, the companies employ more than 1,100 staff.