Equity capital is generally regarded a key ingredient in the funding mix for businesses in a successful economy. Many businesses, particularly those at a pre-revenue stage, are simply not in a position to repay capital and interest on a loan and trading some equity for much-needed cash makes a lot of sense. And one key source of equity finance for a business is its bank.
“AIB is not only in the business of lending but is also a substantial provider of equity capital to ambitious early-stage and established companies,” explains Cathy Bryce, managing director of AIB Capital Markets. “AIB’s Equity Capital unit, which is the principal investment arm of AIB Group, has approximately €430 million invested in 440 companies providing over 12,000 Irish jobs.”
Of that €430 million, €80 million is invested directly in established companies and projects, while the remaining €350 million is committed indirectly through seed, venture capital and private-equity funds to back start-ups and emerging companies.
“AIB Equity Capital seeks to benefit the Irish economy by backing businesses that help create jobs in Ireland, support the delivery of the bank’s wider environmental, social and governance [ESG] agenda and generate a commercial return for the bank,” Bryce adds.
During 2022, the bank made three direct minority investments totalling about €35 million to support the growth of three ambitious Irish businesses operating in very different sectors.
Johnson Hana is an alternative legal services provider (ALSP), headed by founder and chief executive Dan Fox, which provides legal process work in a cost-efficient way to its clients. AIB’s investment will be used to scale Johnson Hana to allow it to meet unprecedented client demand both in Ireland and abroad and to support ambitious job-creation targets.
BNRG is an Irish-based solar energy developer and operator headed by founder and chief executive David Maguire. The company currently has a solar development pipeline of 2.7 gigawatts (GW) across Ireland, the United States, the UK and Australia, in addition to 23 megawatts of operating assets in the US. AIB’s investment will help fund BNRG’s development pipeline.
Fortus is an Irish distributor of security solutions, such as alarms, access control and gate automation systems, with customers in Ireland and the UK. The company is led by founder and executive chairman Brian Honan and chief executive officer Mark Brophy, and AIB’s investment will help Fortus continue to scale through acquisition.
AIB also successfully exited its direct position in Fulfil Nutrition during the year. AIB invested in the vitamin and protein bar business in 2017 to support its international growth. It has now been acquired by the Ferrero Group, which plans to continue to build its strong brand.
Also in the last year, another direct investee company, TransferMate, the leading provider of business-to-business payments infrastructure, completed a $70 million (€64.7 million) funding round which gave the company an overall valuation of $1 billion.
AIB Equity Capital has made a number of investments in the renewables sector including Greencoat Renewables plc, a listed Irish company investing in Irish and European wind farms and renewable energy infrastructure. The unit has also committed capital to the Temporis Aurora Fund, which is creating development platforms in onshore wind, offshore wind and solar with the aim of delivering 2GW of renewable energy assets by 2030.
The bank continues to invest in seed, venture and private-equity funds, primarily those operating in the Irish market. At December 2022, those investments totalled €350 million in 28 funds which had a combined size of about €3 billion.
In 2022, AIB appointed private-equity managers Foresight Group to manage an SME equity impact fund with a target of investing €75 million in businesses that help accelerate Ireland’s transition towards a low-carbon economy. AIB provided a €30 million cornerstone investment to the fund, which aims to stimulate job creation and ensure a greener future for the country by investing between €200,000 and €5 million in SMEs. The fund made its first investment in August 2022, providing €4.1 million to support the management buyout of Etag Fixings, which produces a range of environmentally friendly building products.
“AIB Equity Capital aims to back the entrepreneurial companies of the future and support the wider Irish economy through the jobs those companies create,” says Bryce. “During 2023 AIB Equity Capital aims to grow its investment portfolios and has recently added to the team to accelerate its expansion. Last year, the team made investments totalling approximately €110 million and expects to increase this in 2023. AIB Equity Capital’s ability to be flexible in terms of structure and investment period makes it an attractive equity partner for ambitious management teams seeking to scale. In addition, the wider AIB Group can provide debt capital, advice and other services through Goodbody Corporate Finance, meaning it can provide a complete solution to growing companies.”
Find out more at https://aib.ie/corporate/financing/funding-solutions/equity-capital