The Australian Business Growth Fund (ABGF) was created to increase investment in small businesses by providing an attractive alternative to traditional loans and private equity.
This is a public-private partnership aimed at Australian SMEs which are growing and have turnovers of between $2-100 million. A key point of difference from other types of equity funding is the ABGF’s sole focus on minority investment positions.
The federal government’s $100 million investment has been matched by the big four banks (CBA, ANZ, Westpac and NAB) to bring the Fund’s initial capital to $540 million, with the aim to grow the total to $1 billion in time. Additional investments have also been made by Macquarie Bank and HSBC.
This Fund has a clear mandate to grow investment in a sector which has been underserved from an investment standpoint compared to the huge bets often made on startups or when taking a controlling stake.
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What is the Australian Business Growth Fund (ABGF)?
The Australian Business Growth Fund is an investment company which provides capital investments in return for minority stakeholder positions. The ABGF’s business model follows established overseas funds including the UK’s 2.5 billion pound (roughly 4.4 billion AUD) Business Growth Fund and a similar fund in Canada.
The ABGF provides a range of financial support in exchange for shareholder positions of between 10-49 per cent, an investment strategy which ensures investee companies maintain control of their business.
The Fund plans to deploy its initial funds across the next five years, roughly $100 million per year. Each deal takes around 10 weeks and results in 3-10 year investment horizons.
Where necessary, the Fund will assemble a board and take a seat. An independent Chairperson will also be appointed to open up the Fund’s network to the business to help it to grow.
For business owners, this Fund represents the opportunity to access growth capital without the need to relinquish control, or secure a traditional loan against company assets, or take on excessive debt.
ABGF Level of support
The Fund will provide capital investments of $5 million to $15 million in return for a stake of 10 to 49 per cent. There will also be the option to release cash out equity to owners/founders.
ABGF important dates
- Applications are open until the funds are exhausted
ABGF Program important details that you will need to know
What are the Australian Business Growth Fund’s objectives?
The Fund’s objectives are to:
- support economic growth and the creation of jobs
- increase the availability of patient equity capital for SMEs
- increase the level of investment in SMEs
- stimulate domestic and international trade
- provide mutually beneficial capital investments, with the Fund seeking modest commercial returns
ABGF investment type and strategy
ABGF investments are overseen by its investment committee, which is independent of its shareholders. This allows the fund to move quickly.
Investment types
Various types of investments are available, including ordinary shares, preference shares, loan notes and convertible notes, or a combination.
Other types of non-financial support will also be made available through the Fund’s industry connections, which should enable founders and entrepreneurs to gain access to additional expertise, advice, mentoring and referrals.
Investment strategy
The ABGF’s strategy is to be a patient investor; the Fund doesn’t have hard exit deadlines but will work closely with companies in its portfolio to determine the ideal exit strategy.
The investment strategy focuses exclusively on minor positions of up to 49 per cent, providing a balance between delivering significant financial impact for long-term growth, and ensuring business owners maintain control. The Fund takes a seat on the board (which it will create if necessary) to ensure visibility.
The ABGF is a public-private partnership but operates as an independent company, separate to the government. Capital flows from banks and superannuation funds into the ABGF which in turn invests it into SMEs for commercial returns.
ABGF investment timelines
The Australian Business Growth Fund follows a roughly 10-week process when making each investment. The investment process comprises the following steps:
- exploration (3-4 weeks)
- term sheet
- due diligence (4 weeks)
- approval
- transaction docs (2-3 weeks)
- investment
The resulting partnership will last for between 3-10 years in line with the exit strategy which will be determined by the ABGF and its investees.
Australian Business Growth Fund eligibility criteria
To be eligible for an ABGF investment, your business must:
- Have revenue between $2-100 million
- Be able to demonstrate at least 3 years of profitable and growing operations
- Be headquartered in Australia
- Have a clear strategy for growth
What types of organisations is the ABGF most suitable for?
The Australian Business Growth Fund does not stipulate specific sectors of industry or business activities in its eligibility criteria, but its focus is on investing in established and growing Australian businesses.
The ABGF does not invest in:
- Early-stage startups or unproven business models
- Controlling equity stakes
- Change of control buyouts
- Distressed investments
- Mining
- APRA-regulated businesses (e.g., Fintech companies)
- Real estate
Applying for ABGF Program
Applications are via an online form available on the ABGF website.
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ABGF Resources
A selection of ABGF portfolio companies
The Fund’s portfolio companies include software companies, last mile delivery companies, an innovative dental practice, an EV manufacturer and a home furnishings retail disruptor.
| DIY Blinds Industry: Retail Investment: $15 million Learn more | DIY Blinds is disrupting the home furnishings industry with its online business model, which offers greater flexibility than the capital-intensive brick-and-mortar retail model. The company received a $15 million investment from the ABGF to take bigger bets on its future and accelerate its expansion. |
| Scipher Industry: Environmental Services Investment: $7.5 million Learn more | Scipher specialises in e-waste processing, the recycling of televisions, mobile devices, computers and more as part of a growing global market which is expected to exceed $100 billion in the next 8-10 years. Scipher received a $7.5 million investment from the ABGF to expand its footprint and continue to invest in technological innovations. |
| 3ME Technology Industry: Manufacturing Investment: $15 million Learn more | 3ME Technology manufactures high-tech lithium-ion batteries and EVs for heavy-duty applications. The ABGF’s $15 million investment in the company will be used to market to new sectors, expand its facilities and continue to invest in R&D, with the business expected to triple in the next five years. |
| Capsifi Industry: Software Investment: $11 million Learn more | Capsifi creates software-as-a-service (SaaS) products for digital transformation. Its products have been adopted by many major brands including AMEX, IKEA, AMP and Costco. The company received an $11 million investment from the ABGF to accelerate product development, expand internationally and invest in talent acquisition and ongoing innovation. |
| Kikada Lane Dental Industry: Health Investment: $10 million Learn more | Kikada Lane Dental operates an innovative partnership-based business model which splits ownership 50-50 between the company and a practice principal, providing mutually beneficial equity and growth incentives. The group received a $10 million investment from the ABGF which will act as a strategic growth partner. |
| HUBBED Industry: Ecommerce/Logistics Investment: $12 million Learn more | HUBBED handles last mile delivery and returns logistics for users of ecommerce platforms, integrating thousands of physical locations to provide more convenient pick up and drop off experiences for end users. HUBBED received a $12 million investment from the ABGF in return for a 30 per cent voting interest which will help the company to scale up its locations and accelerate new service offerings. |
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