Standing firm through Covid and Brexit
Stephen, who has a long career as an investor, founded BGF in 2011. Since then, the organisation has invested around £3.2 billion in over 450 companies.
He spoke about how BGF withstood previous crises.
“If I take 2016 as an example, Brexit dominated, there was a lot of uncertainty and many investors chose to sit on the sidelines,” he said.
“But we continued to do what we always do… we invested in strong and growing SMEs, and our investments in 2016 have proved to be a very successful vintage for us.”
He added: “We continued investing through Covid too. Nobody had any experience of running businesses through lockdowns. But our portfolio team and network of over 6,000 business experts were able to help the companies in our portfolio respond to the crisis and manage their cash through that difficult time.”
Life sciences and clean technology show particular promise
When asked about the biggest growth investment opportunities in the UK, in addition to the breadth and diversity of BGF’s overall portfolio approach, Stephen highlighted two emerging sectors. He spoke about life sciences – which include pharmaceuticals, neuroscience and biotechnology – and so-called ‘clean technology’.
“The future will be driven by innovation, science, companies that can solve problems,” he said. “That’s why the life sciences sector is looking very attractive right now.
“There is an increase in products and services coming out of that sector, and the UK has a competitive advantage. It has the academic weight of Oxford and Cambridge and a high level of expertise as demonstrated by the country’s response to Covid.”
As for clean technology, Stephen said that, while the UK had done a good job developing off-shore wind farms, there was still work to do investing in supply chains and broader areas such as energy storage and efficiency, creating opportunities for UK investors.
“This kind of knowledge-based economy really does play to the strengths of the UK,” he said.
An economy experiences ‘stagflation’ when growth is stagnant and inflation is high. It’s an unwanted situation because money is losing value while investments into assets such as shares in companies aren’t making returns because there is such low, or even negative, economic growth.
Stagflation became financially synonymous with the difficulties the UK and other economies faced in the 1970s. The oil producing organisation OPEC embargoed oil exports to many western nations, pushing up oil and energy prices dramatically. The rise in the cost of living, fuelled in part by wage price spirals, coincided with stagnant economic growth, and unemployment was high while things got more expensive. This resulted in stagflation.
Although we currently have an energy shock, especially in Europe, as a result of the Russian invasion of Ukraine, the main driver of today’s inflation pressures was the pandemic. It led to a large demand for goods when strained and locked-down supply chains couldn’t cope.