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					Bridges
Ventures
ERSC seminar

March 2007




backing entrepreneurs / delivering financial returns / making a social impact
contents
of this presentation
•     drivers of social investment and policy history

•     introduction to Bridges Ventures

•     government policy – lessons and challenges




backing entrepreneurs / delivering financial returns / making a social impact
                                               1
social investment
drivers of growth
•   thriving entrepreneurial societies create wealth but leave social and environmental
    problems

•   government and charity alone cannot reverse the effects

•   growing consumer demand for ethical products and responsible businesses

•   socially responsible investment (SRI) popular and growing in quoted investments -
    according to research by the UK Social investment Forum, by December 31st
    2005, the broad UK SRI market was over £560 billion pounds (€781 billion euros).

•   social investment offers a way for the financial sector to play a role in addressing
    social and environmental problems


                                             2
   development of policy in relation to the
   social investment sector
  high                                                                               ROBUST MARKET
                                                                                     • a thriving social venture capital
                                                                                       sector including quasi-equity for
                                                                                       social enterprises
                                              MARKET DEVELOPMENT                     • “Social Investment Bank”
                                              • new organisations entering the       • Social investment stock market?
                                                social investment space from
             MARKET CREATION                    venture philanthropy through to
market       • social investment taskforce      financial returns + social impacts
maturity     • community investment tax       • involvement of private equity
               relief                           leaders
             • bank disclosure                • Community Interest Company
             • community development            (CIC)
               venture capital                • Office of the Third Sector
             • community development
               finance
   low       • programme related investment

           2000                                                2005                                        2010
   graphics adapted with thanks from Venturesome


                                                           3
introduction
to Bridges Ventures




backing entrepreneurs / delivering financial returns / making a social impact
introduction
our aims
Bridges Ventures is a private sector company with a social mission. We make investments that
have the potential to deliver attractive financial returns whilst making a positive social or
environmental impact

We believe that market forces and entrepreneurship can be harnessed to bring social and
environmental benefits as well as making financial returns. Bridges Ventures seeks out
investment that can do well by doing good




backing entrepreneurs / delivering financial returns / making a social impact
                                               5
introduction
social criteria
Bridges Ventures invests in unquoted entrepreneurial businesses with the potential to make
strong financial returns and to have a positive social impact in at least one of two ways:

•     regeneration – we invest in ambitious businesses that are located in the most
      deprived 25% of the country and can deliver a strong multiplier effect as they spend
      money and recruit in our these areas.
      key sectors targeted: leisure and hospitality, consumer, business and consumer
      services, manufacturing and distribution

•     sustainable business – we invest in businesses whose social impact is not through
      where they are but through what they do
      key sectors targeted: environment, healthcare, education, ethical business



backing entrepreneurs / delivering financial returns / making a social impact
                                               6
making a social impact
our three stage process
social screen       we set clear social impact criteria of location or sector then use strictly
                    commercial criteria to select those companies that pass our social
                    screen. We are looking for investments that can be winners commercially
                    as well as doing good

engagement          we work with the companies we back to look for ways to improve their
                    community and environmental impacts while also increasing the value of
                    the businesses

reporting           we report to our investors on the social impact of the companies we back
                    as well as their financial and commercial performance




backing entrepreneurs / delivering financial returns / making a social impact
                                               7
introduction
highlights
•      founded in 2002 by Apax Partners, 3i and Tom Singh of New Look

•      Bridges CDV Fund I closed at target £40m in 2002: catalysed by a £20m
       investment from the Government

•      Bridges CDV Fund II closed 50% above target at £75m: 100% private sector

•      invested £55m to date in 36 companies across Bridges CDV Funds I and II

•      realisations of almost £14m from 3 exits and one partial exit in Bridges CDV
       Fund I, representing over 50% of invested capital from CDV Fund I




backing entrepreneurs / delivering financial returns / making a social impact
                                             8
case
studies




backing entrepreneurs / delivering financial returns / making a social impact
financial results                              social results
•      sold in August 2006 to The Daily        •    over 80 new jobs – majority are women
       Mail and General Trust plc for £22m          and ethnic minorities

•      £345k invested, £7.5m return            •    >60% of staff came out of unemployment

•      165% IRR                                •    raised over £0.5m for charity partners
                                                    such as MIND, Barnados and the Woodland Trust
•      22x money multiple
                                               •    promoted switching to renewable energy

                                               •    created an entrepreneurial role model of success




    backing entrepreneurs / delivering financial returns / making a social impact
                                                   10
financial results                                   social results
•   trade sale to Clondalkin Group                  •   located in Hull, in the most deprived 2%
                                                        of the country
•   £730k invested, £2.3m return
                                                    •   company was turned around, saving 50
•   84% IRR                                             jobs and creating 5 new jobs

•   3.3x money multiple                             •   Clondalkin opened a new factory in
                                                        Poland and aimed to integrate its own
                                                        label printing operations in Hull




backing entrepreneurs / delivering financial returns / making a social impact
                                               11
financial results                                       social results
•   management are out-performing budget                •    attracts businesses into our target
                                                             areas, bringing strong multiplier
•   100% occupancy at first 3 buildings                      impact

•   mature occupancy achieved in less than 4            •    green roof project with local charity
    months at all buildings                                  and inner city school

•   gross/ungeared yields of +18%

•   roll-out of > 4 new buildings in progress




backing entrepreneurs / delivering financial returns / making a social impact
                                                12
government policy
lessons and
challenges




backing entrepreneurs / delivering financial returns / making a social impact
government policy
lessons and
challenges




backing entrepreneurs / delivering financial returns / making a social impact
government policy
funds managed
2002                Bridges Ventures founded
                    Bridges CDV Fund I closed at target £40m
                    social impact focus: regeneration of economically deprived areas


2007                Bridges CDV Fund II closed 50% above target at £75m
                    social impact focus: regeneration and sustainable business




backing entrepreneurs / delivering financial returns / making a social impact
                                               15
government policy
core investors
founders            3i, Apax Partners, Tom Singh


banks               HSBC, Barclays Business Banking, Citigroup, The Royal Bank of
                    Scotland, Lloyds TSB, Lehman Brothers

pension funds       West Midlands Pension Fund, South Yorkshire Pensions Authority,
                    Railways Pension Trustee Company Ltd, Gartmore

others              Doughty Hanson & Co, All Souls College, Merton College, Reuters,
                    Department of Trade and Industry (Bridges CDV Fund I only),
                    family trusts, high net worth individuals including Jon Moulton and
                    Jeremy Coller


backing entrepreneurs / delivering financial returns / making a social impact
                                               16
government policy
lessons learned
•   designed by socially motivated investors

•   government as catalyst (not implementing)

•   structured to bring the private sector where it would not have ventured

•   clear social goals defined at the beginning and measured




backing entrepreneurs / delivering financial returns / making a social impact
                                               17
government policy
challenges
•   State Aids!!!

•   long-term investment meets short-term government mindset

•   changing government priorities

•   changing government teams




backing entrepreneurs / delivering financial returns / making a social impact
                                               18
government policy
current initiatives in social finance
•   Social Investment Bank

•   Office of the Third Sector Social Enterprise quasi-equity fund

•   Adventure Capital / Futurebuilders

•   social investment stock market




backing entrepreneurs / delivering financial returns / making a social impact
                                               19
final
conclusions




backing entrepreneurs / delivering financial returns / making a social impact
final
conclusions

•     Government can play a powerful catalytic role



•     they should be led by the social entrepreneurship and social investment sectors so that
      initiatives genuinely meet market needs



•     UK is a global leader in finance – should seize global leadership in social finance!




backing entrepreneurs / delivering financial returns / making a social impact
                                               21
appendices




backing entrepreneurs / delivering financial returns / making a social impact
Eligible Local Authorities*
 East of England                 North East                    North West (cont’d)            Yorkshire and the               Scotland (cont’d)
    Great Yarmouth                                                                              Humber                          Inverclyde
                                    Blyth Valley                  Rochdale
    Norwich                                                                                                                     North Ayrshire
                                    Derwentside                   Salford                       Barnsley
 East Midlands                      Easington                     Sefton                                                        North Lanarkshire
                                                                                                Bradford                        Renfrewshire
    Ashfield                        Gateshead                     St Helens                     Calderdale
    Bassetlaw                       Hartlepool                    Tameside                                                      South Lanarkshire
                                                                                                Doncaster                       West Dunbartonshire
    Bolsover                        Middlesbrough                 Wigan                         Kingston upon Hull, City of
    Chesterfield                    Newcastle upon Tyne           Wirral                        Kirklees                      Wales
    Corby                           North Tyneside                                              Leeds
    Derby                           Redcar and Cleveland
                                                               South East                                                       Blaenau Gwent
                                                                  Brighton and Hove             North East Lincolnshire         Bridgend
    East Lindsey                    Sedgefield                                                  Rotherham
    Leicester                       South Tyneside                Hastings                                                      Caerphilly
                                                                  Portsmouth                    Sheffield                       Cardiff
    Lincoln                         Stockton-on-Tees                                            Wakefield
    Mansfield                       Sunderland                    Thanet                                                        Carmarthenshire
    Nottingham                      Wansbeck                                                  Northern Ireland                  Ceredigion
                                                               South West                                                       Conway
                                    Wear Valley                   Bristol, City of              Belfast
 London                                                                                         Cookstown                       Denbighshire
    Barking and Dagenham         North West                       Caradon                                                       Gwynedd
                                                                  Carrick                       Craigavon
    Brent                           Barrow-in-Furness                                           Derry                           Isle of Anglesey
    Camden                          Blackburn with Darwen         Kerrier                                                       Merthyr Tydfil
                                                                  North Cornwall                Dungannon
    Greenwich                       Blackpool                                                   Limavady                        Neath Port Talbot
    Hackney                         Bolton                        Penwith                                                       Newport
                                                                  Plymouth                      Moyle
    Hammersmith & Fulham            Burnley                                                     Newry and Mourne                Pembrokeshire
    Haringey                        Copeland                      Restormel                                                     Rhondda Cynon Taf
                                                                                                Omagh
    Islington                       Halton                     West Midlands                    Strabane                        Swansea
    Lambeth                         Hyndburn                      Birmingham                                                    Torfaen
    Lewisham                        Knowsley                      Coventry
                                                                                              Scotland
    Newham                          Liverpool                     Sandwell                      Clackmannanshire
    Southwark                       Manchester                    Stoke-on-Trent                Dundee City
    Tower Hamlets                   Oldham                        Walsall                       East Ayrshire
    Waltham Forest                  Pendle                        Wolverhampton                 Falkirk
    Westminster                     Preston                                                     Glasgow City

 *Based on Index of Multiple Deprivation for England and equivalents for the rest of the UK

backing entrepreneurs / delivering financial returns / making a social impact
                                                                       23
portfolio companies
early stage

name            business                     location        date of inv   transaction size

                provider of washroom         West Midlands   August 04     £540k
                services




                motivational                                 October 06    £1.5m
                                             West Midlands
                stickers for school
                children



                insurance broker             Bournemouth     March 05      £1.7m
                specialising in home
                insurance for the over-50s




backing entrepreneurs / delivering financial returns / making a social impact
                                                        24
portfolio companies
early stage

name            business                     location          date of inv   transaction size

               online booking                London            October 03    £2.4m
               engines for airlines




               a virtual secretarial and     Nottingham        July 06       £751k
               billing service for doctors




               re-refiner of waste oil       Stoke-on-Trent    May 06        £1.5m




backing entrepreneurs / delivering financial returns / making a social impact
                                                          25
portfolio companies
management buy-outs

name             business                location            date of inv   transaction size
                 designs, manufactures   North London        June 04       £5.2m
                 & distributes curtain
                 poles, blinds &
                 accessories


                 stair lift designer     North East          July 04       £6.1m
                 & manufacturer




                 I.T. repair services    South East          March 07       £7.6m




backing entrepreneurs / delivering financial returns / making a social impact
                                                        26
portfolio companies
property-backed businesses
name            business                    location          date of inv    transaction size

                flexible office space in    London            September 03   £17m
                under-invested areas



                high quality limited        London            April 04       £18.4m
                service hotels



                roll-out of self storage    North-West        March 06       £8.9m
                facilities across North
                England


                indoor real snow ski        North-West        August 06      £31m
                slopes and Alpine village



backing entrepreneurs / delivering financial returns / making a social impact
                                                         27
Team Biographies
 Philip Newborough, Managing Director
 Philip has managed 2 VC-backed businesses and a substantial pan-                    Sam Archer, Assistant Director
 European business. He previously worked at Aiwa as Director and GM                  Sam worked as a Chartered Accountant with PricewaterhouseCoopers in the
 and was then appointed MD of MWB Business Exchange, a serviced                      Financial Services and Real Estate teams. Prior to joining Bridges he helped
 office provider.                                                                    run a small residential property business, gaining useful experience within an
                                                                                     SME environment.
 Michele Giddens, Executive Director
 Michele has 10 years of international development and community                     Lisa Barclay, Assistant Director
 finance experience ranging from large equity and debt instruments to                Lisa previously co-founded E-Government Solutions, an e-government software
 micro-finance and small business lending. She was previously at the                 company. She has also worked as a strategy consultant for Marakon
 Shorebank Corporation and was Chairman of the Community                             Associates focusing on the FMCG and financial services sectors, and as a
 Development Finance Association (CDFA) 2003-2005.                                   special advisor to Government Ministers.

 Carolyn Maddox, Executive Director                                                  Henry Shelford, Assistant Director
 Carolyn has 14 years of private equity investment, previously working at            Henry was previously with awareness Inc., a Walthan USA start-up focused on
 3i as an Investment Controller and then as Director of Causeway Capital             enterprise web 2.0 solutions. Prior to that he was an executive at Invex Capital.
 and ABN Amro Private Equity (UK). Prior to joining Bridges Ventures she             Henry has a degree in Environmental Science from King’s College London and
 worked at Equinox Securities specialising in raising finance for technology         an MBA from the University of Virginia.
 companies.
 Antony Ross, Executive Director                                                     Huw Edwards, Associate
 Antony has 14 years of private equity investment in a wide range of                 Huw previously worked for Goldman Sachs, starting his career in the Capital
 businesses from early stage development opportunities to later stage                Markets division where he focused on structuring equity derivative solutions for
 management buy outs. He led 3i’s healthcare team from 2000 to 2001                  European corporate clients. He moved on to become an Associate in the Fixed
 supporting medical technology and biotechnology businesses across                   Income, Currencies & Commodities division advising UK corporate clients on how
 Europe. Previously he managed 3i’s Newcastle and Cambridge offices.                 to manage their foreign exchange and interest rate exposures.
 Jeremy Philips, Investment Director                                                 Maggie Loo, Associate
 Jeremy has 25 years experience in the property sector. He has been                  Maggie started her career as a strategy management consultant with McKinsey &
 involved in a wide range of markets including residential, offices, hotels          Company in New York City. Prior to joining Bridges, she worked at London-based
 and industrial. For 7 years he was a Director of Acquisitions at MWB                Climate Change Capital. Maggie studied environmental science and public policy
 Group plc, and prior to joining Bridges, he had his own successful                  at Harvard University and has an MBA from Columbia Business School.
 property consultancy.
Anne-Marie Harris, Assistant Director                                                Laura Howard, Associate
Anne-Marie has 8 years of mid-market corporate finance experience. She was           Laura was previously Operations Director and founder of nude skincare, a
previously at Close Brothers Corporate Finance and latterly at McQueen, the          premium ethical skincare brand. She has also worked as a strategy consultant for
specialist corporate finance advisory business focusing on the leisure, retail and   Bain & Co. Laura holds an MBA from the Harvard Business School where she
consumer sectors.                                                                    focused on strategy, marketing and social enterprise.




backing entrepreneurs / delivering financial returns / making a social impact
                                                                               28
contact us
Bridges Ventures
1 Craven Hill
London
W2 3EN

t: +44 (0) 20 7262 5566
f: +44 (0) 20 7262 6389
e: info@bridgesventures.com

www.bridgesventures.com




Bridges Community Ventures (trading as Bridges Ventures) is authorised and regulated by the Financial Services Authority


backing entrepreneurs / delivering financial returns / making a social impact

				
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