The Government has announced the formal establishment of the Australian Business Growth Fund (BGF) to provide longer term equity funding for businesses.

The Shareholders Agreement has been signed by all seven shareholders and Anthony Healy has been appointed as the inaugural Chief Executive Officer of the BGF. Mr Healy has had a senior commercial banking career with a focus on assisting SME customers to grow and succeed. This follows the appointment of the Chairman of the BGF, Will Hodgman, former Premier of Tasmania, earlier this year.

The Morrison Government has committed to working alongside participating banks to ensure that small and medium-sized businesses (SMEs) have access to the equity finance they need as we move into the recovery phase of the COVID-19 pandemic.

The Government is making an investment of $100 million and partnering with other financial institutions to provide equity funding to SMEs through the BGF. The major banks including ANZ, CBA, NAB, and Westpac have also each committed $100 million to the BGF. HSBC and Macquarie have also committed $20 million each in support of the BGF.

This will give the BGF an initial investment capacity of $540 million, with the ambition to grow the fund to $1 billion as it matures. The BGF will operate commercially and make investment decisions independently of Government.

Kate Carnell, the Australian Small Business and Family Enterprise Ombudsman, says the formal establishment of the Australian Business Growth Fund is excellent news for high growth potential SMEs.

The Australian Business Growth Fund, as recommended in the Ombudsman’s Affordable Capital for SME Growth report, will allow established SMEs with annual revenue between $2 million and $100 million, to apply for long-term equity capital investment of between $5 million and $15 million.

“The launch of the Australian Business Growth Fund is fantastic news for high growth potential SMEs who require essential long-term equity finance to flourish,” Ms Carnell says.

“The fund will fill the critical gap, identified in our Affordable Capital for SME Growth report, for patient capital to enable our up-and-coming SMEs to succeed. 

“While businesses need to demonstrate three years of revenue growth and profitability, there are allowances in place for the impact of the COVID crisis on recent business performance.

“Importantly the fund has appointed Anthony Healy as CEO and Will Hodgman as Chairman and will be managed by private sector expertise.  

“Minority shareholding of between 10% and 40% will enable these promising businesses to retain control of their company, while providing the funds they need to invest in growth.

“Similar models in the UK and Canada are tried and tested – overcoming barriers to accessing affordable capital for businesses that have gone on to demonstrate successful growth.

“We welcome both the federal government investment in the fund, along with the major banks and financial institutions’ contribution.

“The fund is valued at $540 million and we welcome the ambition to grow the fund to $1 billion as it matures.

“In supporting our high growth potential SMEs, the Australian Business Growth Fund will play a significant role in encouraging business growth and economic recovery at a time when we need it most.”

More from The Business Conversation:

SMEs urged not to overlook domain names: new research

Regional innovators turn big ideas into business outcomes

Aussies more likely to miss workplace banter than other markets: Atlassian