All our programmes, with the exception of the grant funding and operating costs element for The Start-Up Loans Company, count towards our financial return target. The Bank targets achieving a return on capital at least equivalent to the Government’s medium term cost of capital. We have a target for the end of March 2019 of 2.525%.
Adjusted return on capital employed
The British Business Bank achieved a 4.7% return on capital employed in 2017/18, which was higher than the 4.1% generated in 2016/17 and our target for the year. This rise was principally generated by strong investment performance with an increase in income from the Investment Programme assets and legacy Venture Capital funds as well as foreign exchange gains.
Income from Wholesale and Guarantee Solutions programmes has also increased. This has been offset by a fall in income from EFG, increased impairments in the Investment Programme and a fall in positive fair value movements on VC Catalyst. Operating costs have also increased as the Bank expands to assume additional responsibility for new objectives and as it invests in its systems, controls and processes.
Excluding foreign exchange gains of £0.7m and income from legacy Venture Capital funds of £22.8m, the return would have been 1.5% lower.
British Business Bank: helping to create Unicorns
The British Business Bank is the largest UK based Venture Capital Limited Partner investing in UK VC. A Unicorn is a company, valued at $1bn or more. Through its investments, the Bank has helped the following UK companies reach Unicorn status.
Captify, listed by Forbes as ‘One to Watch’, was founded in 2011 by entrepreneurs Dominic Joseph and Adam Ludwin. An ad-tech company specialising in ‘search retargeting’, it is a global leader in Search Intelligence, playing a crucial role for some of the world’s biggest brands.
It raised its first funding in 2013 – £1.2m from British Business Bank Enterprise Capital Funds programme partner Panoramic Growth Equity – enabling growth from nine to 37 staff.
Panoramic invested again, alongside Smedvig, in a subsequent £8m round to help enable further international expansion.
The company now expects to achieve £50m+ turnover and has over 200 people in six countries.