‘Gordon Gecko is dead’ - Changing face of private equity sector
Eastern Daily Press
Nicholas Mettyear, of Foresight Group, on why the East is primed for investment
The private equity industry has long been viewed with a degree of suspicion. No more so than in East Anglia, which has seen a disproportionately small volume of private equity transactions, with just 2pc of the UK’s private capital invested in the region.
There remains an expectation that people in our line of work will turn up from London and will be a mix of Wall Street’s Gordon Gecko, Pretty Woman’s Edward Lewis and your least favourite investor from Dragon’s Den.
This can prove a little challenging when we meet the management teams of exciting local companies for the first time. It leads to some tough questions, particularly from founder-owners who have built their business from scratch and are rightly focused on their company’s future. We face three common fears. Firstly, we will burden companies with crippling debts. Secondly, as soon as the paperwork is signed, we will rapidly cut employee numbers. Finally, we will tell management how to run their business.
Whilst these concerns may have some basis of truth in some larger private equity transactions, they certainly don’t apply when investing in SMEs. To do any of these would be very counter-productive for an investor targeting smaller companies where management teams are the key to success. For these companies, it is not debt but sustainable growth that drives returns.
Foresight opened an office in Cambridge and made a number of local hires to ensure we work closely with the region and its businesses. We have always been a growth investor and the strength of the management team is one of the key criteria that we assess.
We are not in the business of aggressive cost-cutting, nor using large levels of debt – with the majority of our investments completed with no debt at all. We look to build returns for our investors and management teams by supporting growth scale through developing new products and extending market reach. Finally, with a broad portfolio of over 100 companies, we do not pretend to know the day-to-day operations of companies better than the management teams.
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We back innovative and proactive teams who know their company and market inside out, by providing strategic support, financial firepower and an ambitious mindset.
Foresight Group LLP is regulated by the Financial Conduct Authority.