BGF Makes First Investment In Young Entrepreneur
Benefex, a leading provider of online employee reward and benefit schemes, is the first UK business to secure growth capital from the BGF
Bristol, 6 October 2011– the Business Growth Fund (BGF), established to help Britain’s fast growing smaller and medium sized businesses, today announced its first investment in Benefex, a leading provider of flexible, online employee reward and benefit schemes that operates in a high growth sector. Benefex enables large organisations to tailor their rewards and benefit packages to individual employees, communicate effectively online with staff, and outsource administration and support of their schemes.
The BGF has invested £4.2m of growth capital in Benefex and will take a minority stake. With over 50% growth in turnover year on year, Benefex continues to expand rapidly with turnover approaching £10m in 2012.
The company is led by Matt Waller, a 33-year-old entrepreneur, who started the business from his own home when he was just 25, and has grown it to become one of largest online employee reward and benefits providers in the UK. The company currently provides services to over 500 clients, managing online benefits schemes for over 1 million employees in more than 40 countries. Its clients include the AA, Coca Cola, Bank of America Merrill Lynch, De Beers, E.ON, Philips, MTV and Centrica. It operates from its head office in Southampton, with a further presence in Marlow and London.
The market in which Benefex operates is enjoying rapid growth. Many employers are looking at how best to attract, retain and motivate their staff and recognise the value of flexible rewards and benefits packages that can be tailored to the needs of the individual. This market is believed to be worth in the region of £100 million and is growing at nearly 10%. These arrangements are often complex, particularly for large companies, which in turn is driving demand for outsourced services.
Service providers which offer technological support are outperforming the market, growing at twice the rate at some 20%. This is due to an increasing need for technological support, use of online and intranet services and imminent legislative changes. For example, from October 2012, all employers will have to enroll eligible workers into workplace pension schemes, generating a clear need for online services.
The BGF’s investment will enable Benefex to continue the development of innovative solutions, expand its product and service lines and extend its international footprint. Immediate opportunities exist in the US and Asia Pacific.
As a result of this investment, Benefex expects to create a further 100 jobs in Southampton, Marlow and London.
Paul Oldham, BGF Regional Director for the South West and Wales and now a member of the Benefex board, commented:
‘Benefex is an exciting business, led by a talented and entrepreneurial management team. A start up just eight years ago, it has created a strong market position, developed its service offering and built an impressive client base. It has exhibited consistent growth in tough economic conditions.
The employee benefits reward market is growing explosively due to legislative change and international demand and Benefex is uniquely positioned to capitalise on this due to its highly innovative approach to technology and customer service.
We look forward to working with Matt Waller and the management team to create the world’s leading provider of online employee rewards and benefits.”
Matt Waller, the CEO of Benefex and the first entrepreneur to be backed by the BGF, commented:
“We come from entrepreneurial, ambitious roots. We recognised that the business had reached the point where we needed external capital to take it to the next level and invest in key areas. Without it, we would continue to grow but not at the rate that we would like to.
Having grown the business from startup, it was critical for us to find the right partner. We chose to work with the BGF because we felt that they shared our enthusiasm and ambition and offered more than just money.
We also believe in what they stand for and that they can provide high growth businesses like ours with the funding to continue to contribute to the recovery of the UK economy.”
Stephen Welton, CEO of the BGF commented:
“Benefex is the first of many investments that we will be making in fast growing UK businesses. It typifies the sort of business that we are interested in speaking to.
Since our launch we have been actively out in the market talking to business owners and are now seeing a high level of deal flow. It shows a real and growing demand for a long term partner investor.”
Reading based Spectrum Corporate Finance introduced Benefex to the Business Growth Fund.
Ian Milne, partner at Spectrum Corporate Finance, said:
“We were delighted to work with the Business Growth Fund on their first investment and to introduce them to the team at Benefex. Benefex operates in a dynamic sector with a market-leading proposition and is led by an entrepreneurial and innovative management team. The new investment by the Business Growth Fund will enable the business to capitalise on exciting new development opportunities in its market place both in the UK and overseas and so continue its impressive record of growth and new job creation.”
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Advisers to the transaction:
• Spectrum Corporate Finance (Lead advisers)
• RSM Tenon (Vendor financial due diligence)
• RPL (Commercial due diligence)
• Catalysis (Management due diligence)
• Osborne Clarke (BGF)
• Shoosmiths (Benefex)
• HSBC (Clearing bank to Benefex)
Emily Weston, Equity Dynamics – 07967 838 205
Jane Kirby, Equity Dynamics - 07825 326 441
Jon Rhodes – Director of Marketing & Communications
Notes to Editors:
The Business Growth Fund
The Business Growth Fund has been established to help Britain’s fast growing smaller and medium sized businesses. Growth potential is the key criteria. The BGF will invest between £2m and £10m per business in return for a minimum 10 per cent equity stake and a seat on the board for a BGF director. The Fund will provide long-term equity investment for those growing companies that today do not have access to this source of capital. As such the BGF hopes to be a catalyst for growth among smaller UK companies.
The BGF is an independent company with capital of up to £2.5 billion, backed by five of the UK’s main banking groups - Barclays, HSBC, Lloyds, RBS, and Standard Chartered. The BGF is managed completely autonomously with an independent management team.
The BGF is one of a range of initiatives designed to forge a new relationship between the banking sector and UK businesses, and the BGF works in close collaboration with the British Bankers’ Association as well as other key business organisations across the UK.
Benefex are one of the largest online reward and benefits providers in the UK. Since 2003 they have worked tirelessly to evolve online Reward & Benefits. Working with over 500 clients and more than 1 million employees, Benefex deliver fully integrated Reward, Benefit and Pension portals including Total Reward, Flexible Benefits, Savings, Education, Broking and their new Auto-Enrolment product - Enroller™.
Benefex’s RewardEvolution™ methodology means that whatever a client’s strategy, Benefex can design, execute, support and evolve it’s Reward & Benefits. Key clients include: Bank of America Merrill Lynch, Centrica, Coca-Cola, E.ON, Philips, The AA and MTV.
The business has been nominated for over 20 awards in the last 5 years including Most Effective Benefits Strategy, 2009 (HR Excellence) and Best Corporate Advisor, 2010 (Money Marketing). Most recently, Benefex has been short listed as a finalist for Best Use of Technology in the Fast Growth Business Awards 2011.
Spectrum Corporate Finance is an independent advisory firm established by an experienced team of entrepreneurial partners to fulfill a demand for high quality value added and independent advice. Deal values are typically in the range of £5 million to £100 million over a broad range of sectors and deal types to include company sales, buy-outs, development capital raising and debt advisory.