British capital fund BGF has invested €10 million in Donegal-based Brindley Healthcare.
The investment gives BGF a significant minority stake in the group, which operates eight nursing homes in Donegal, Galway, Mayo, Kildare and Laois.
The investment marks BGF's first use of a dedicated Irish fund established in 2017, which could see it put up to €250 million in SMEs here, primarily through equity investments of between €1 million and €10 million.
Leo Casey, CEO of BGF Ireland, said the country has an aging population, there is an acute shortage of nursing home beds so there is clearly good growth dynamics in the nursing home sector.
Mr Casey said Brindley Healthcare is an interesting business itself. It was established almost 20 years ago by a Donegal business woman, Amanda Torrens.
"It is already a large operator with eight nursing homes across the West, Northwest and Leinster but with a very ambitious growth plan, and to that end, Brindley has been seeking an equity partner to help them part fund that growth alongside bank debt, and also to provide some strategic value at board level," he said.
BGF is looking for investment opportunities across the Irish economy. BGF is a general investor. "We expect to see, and we are seeing investment opportunities across a range of sectors. The ones you would expect: food, services, consumer, healthcare, construction and manufacturing. All of the cornerstones of the Irish economy, and that's where we hope to be deploying capital."
Mr Casey said this investment in Brindley Healthcare in Donegal shows that BGF is not just interested in Dublin-based investment opportunities. "There are very interesting SMEs dotted all over the country. It's not an urban/rural divide by any means," he said. "It's no accident that our first investment is outside of Dublin, and we expect to be investing right across the country, and we'd be disappointed if we don't do that."
Mr Casey disagreed that BGF is 'late to the party' given that other investment funds have been operating in Ireland for a number of years now. He said BGF offers different things. "We are strictly minority only, so business owners that have a plan and who want a capital partner, but who, crucially, want to maintain control, that's our constituency. We don't take over the businesses we invest in, unlike private equity."
"Secondly, we don't set a timeline in terms of investment, so we are not a five-year investment horizon which private equity typically is. Across the UK, it's been 2 years, 7 years, 10 years, whatever it takes and the ultimate rule of thumb in our business is: we'll go when the founders go and not before, and we don't set that agenda."
BGF is based in Britain and is acutely aware of the Brexit challenge. Mr Casey said what they are seeing on the ground is more of an openness to speak to equity investors now, "because faced with the Brexit uncertainty, what do you do? Do you take a risk? Do you take an equity partner on board to strengthen your balance sheet? There might be an opportunity within Brexit as well as the obvious threat."