29/10/2010

By Alex Evans, Editorial Director, National Business Awards

Representing exemplary performance in a diverse range of sectors, finalists of this year’s 3i Private Business of the Year Award gathered to share insights on how they have risen to the challenge of growth in a downturn.

A debate hosted at the offices of Telegraph Media Group, headline media partner of the National Business Awards, drew senior representatives from some of the UK’s top performing private businesses, including fund manager Neptune Investment Management, National Lottery operator Camelot UK Lotteries, renewable energy from waste specialist ENER-G, international engineering consultancy Mott MacDonald, meta search and flight comparison site Cheapflights, corporate FX broker Schneider Foreign Exchange, and pension administration software provider aquilaheywood.

Damian Reece, the Telegraph’s Head of Business and chair of the debate, began by inviting David Whileman, Partner and Head of the UK Growth Capital team at category sponsor 3i, to comment on what his clients have been doing over the last year.

“Companies used to growth have used the last 18 months’ pause to assess their structures, costs and general supplier chains,” said Whileman. “They are sourcing new investment not necessarily to help buy struggling competitors but to de-risk shareholders and acquire businesses overseas as they seek to diversify internationally into new growth markets for their existing products and services.”


Expand to prosper

Picking up on diversification, the panel were asked whether overseas expansion was the only route to growth. “Replication of our model is a logical progression of service for us,” said Will Tracey, sales director and co-founder of Schneider Foreign Exchange, while John Barrington-Carver, representing Cheapflights, said it had adapted its technology and service to move into new markets overseas. “We let technology and innovation lead the move into complementary markets, and now half of our business comes from the US,” he said.

Commenting on its ongoing expansion overseas, ENER-G’s Managing Director, Derek Duffill, said governments were more supportive of the wider range of green energies in Europe. “We are generating energy from waste, but the UK government is backing wind and solar. The German government is much better at supporting the broader green industry. We could be creating more jobs in the UK.”

While most of the panel felt that the best opportunities for growth would come from overseas, particularly in construction, Reece asked how easy it is to establish an international presence.

“It’s much tougher for a British business growing globally than it is for a global business,” said Chris Trinder, Group Marketing Director of Mott MacDonald, which now works in over 140 countries. “Our model is to buy local niche businesses and grow in sectors through these businesses.”

“You need to have local strategic partners to help you,” added Barrington-Carver, while Dianne Thompson, CEO of Camelot, said it had missed out on business from trying to go it alone and a local partner was vital. “In China you need to JV and even then you can only own half of the venture,” said Neptune founder Robin Geffen, who added that sourcing the right funding partner to support expansion in Asia and the Far East was a key focus.


Funding growth

Much of the debate focused on funding growth, and the challenges to private businesses. While most of the finalists had grown organically without having to source external funding, some were now at the stage where they were exploring options. “We appointed Rothchilds to help us find the right mix of debt and equity,” said Duffill, who added that half of ENER-G’s revenue comes from self-funded projects. “We know that we need to surrender equity to raise the kind of money we need to fund our plans. Banks are prepared to lend, but the money’s too expensive.”

While a lot has been said about whether taxpayer owned banks should be forced to lend, several of the finalists observed that banks simply needed to improve their service.

“If relationship managers are not available, or not listening, the service will deter business from borrowing,” said Tracey, while Geffen added that “there is not enough joined up thinking in banks, which is killing business.” David Ackroyd, CEO of aquilaheywood, observed that foreign banks seemed to be offering a better service, while Barrington-Carver concluded by saying that: “UK banks are too inflexible. They are slaves to systems, which limits relationships and delays decisions.”


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