“Small and medium-sized enterprises continue to be the beating heart of the UK economy”
Sponsor foreword by Anthony Hotson, CEO, Cenkos
Cenkos is proud to once again be sponsoring 1000 Companies to Inspire Britain. Small and medium-sized enterprises continue to be the beating heart of the UK economy, with the combined turnover for SMEs in 2017 standing at £1.9trn, equivalent to 51% of the UK total. Despite the importance of SMEs to the UK economy, it would appear that there is still a lack of awareness of alternative sources of funding to debt. This is evidenced by the British Business Bank, which reported that only 1% of SMEs used equity finance over the past three years.
With statistics showing that SMEs continue to favour debt financing, we believe that opportunities are being missed from the benefits that the flexibility and the more permanent nature of equity financing can bring to companies. Equity investors’ longer investment horizons and greater appetite for risk allow growing companies to innovate without the burden of capital repayments. Indeed, equity can often be regarded as a more prudent means of financing, with no covenants and being able to avoid the impact of any future tightening credit conditions.
The UK remains a world-leading market and Europe’s number one destination for foreign direct investment, with capital inflows of $254bn in 2016. The introduction of the AIM market in 1995 has played a key part in this, connecting investors to growing companies, with an aggregate of $141bn raised for nearly 3,800 growth-oriented SMEs; $57bn for IPOs and $84bn for secondary offerings. The UK continues to be the home of some of the world’s biggest investors that are constantly seeking high-growth investment opportunities. Recent years have seen stock markets become more resilient to digesting macro events and we can say confidently that quality growth companies with credible management teams should always be able to find access to capital from the equity investors, regardless of market conditions.
At Cenkos, we have a strong track record of connecting investors with SMEs focused on accelerating their growth. Since our inception in 2005, Cenkos has raised almost £18bn in equity finance, with fund raisings varying in size from £1m to more than £1bn. For smaller companies, VCT and EIS schemes continue to support young, knowledge-intensive businesses and provide a wider pool of patient capital. If you are considering how best to fund the next stage of your company’s growth, it may well be that accessing the equity markets in the UK is the best option for you. We would be delighted to have an informal, no obligations call or meeting to explore matters.