What is the Victorian Business Growth Fund?
The Victorian Business Growth Fund is a $250 million program to support long term growth opportunities for businesses and boost employment and economic development across the State.
The Victorian Business Growth Fund is a Victorian-first initiative that will invest in business on commercial terms and take an equity stake in business, rather than providing a grant.
Established by the Victorian Government and First State Super, the Victorian Business Growth Fund will operate for 10 years and will help to address barriers faced by successful small and medium enterprises (SMEs) that are ready to grow their business but can’t access the funds or find the right partner they need to take the next step.
The Victorian Business Growth Fund will back permanent, high-skilled jobs in priority areas of the economy; jobs that improve workforce diversity, jobs for people that have been unemployed or have a harder time gaining employment and jobs for people trying to reskill and for apprentices.
Roc Partners has been engaged to manage the Victorian Business Growth Fund. The fund will be operated out of a new Victorian office, ensuring local knowledge is leveraged to support the success of the Fund.
How it works
All Victorian Business Growth Fund investment decisions will be made by Roc Partners based on a commercial assessment about the potential growth and return profile for the business, governed by an investment mandate agreed by the Victorian Government and First State Super.
The Victorian Government will have no involvement in investment decisions.
The Victorian Business Growth Fund will invest in businesses on commercial terms and take either an equity or debt stake in businesses, rather than providing a grant. The fund manager will be targeting a commercial return on its investment and will also provide strategic insights, expertise and commercial experience to accelerate growth outcomes for Fund investments.
Roc Partners will deal fairly and transparently with existing business owners as the terms of the Victorian Business Growth Fund’s investment in businesses is negotiated, in line with the terms of the Victorian Business Growth Fund as agreed by the Victorian Government, First State Super and Roc Partners. The fund manager will share with existing shareholders information on the implications on the governance arrangements as a consequence of receiving an investment from the Victorian Business Growth Fund to ensure they are informed before entering the transaction.
While the Victorian Government will not be involved in direct investment decisions, the Government has worked alongside First State Super and Roc Partners in determining the eligibility criteria for the Victorian Business Growth Fund to ensure that they benefit Victoria.
The Victorian Business Growth Fund will consider businesses that:
- Victoria – present a compelling growth opportunity to Victoria, meaning that it is expected to lead to growth in a Victorian business, fund growth of a business expanding into Victoria, lead to meaningful job creation in Victoria or add meaningful capital investment in Victoria
- Revenue – have annual revenue of between $5 million and $100 million
- Assets – have no more than $250 million in assets
- Cash flow – have positive cash flow, or cash flow is expected to be positive during the investment
A similar program to the Victorian Business Growth Fund was run in NSW called the GO NSW Equity Fund.
Some of the recipients of this program were:
- Stone Axe Pastoral, – a Western Australian cattle business, expanded into NSW buying a 2145 hectare Northern Tableland property to run around 2000 full-blood wagyu, the world’s most expensive beef. The business is aiming to become the country’s biggest wagyu beef producer. The deal in February 2018 was expected to create 76 full-time jobs over the next five years.
- Australia’s Oyster Coast – an oyster collective based on the NSW south coast, which counts more than 45 NSW oyster growers among its shareholders. Producers who were not part of the collective, including the NSW Farmers Federation Oyster Committee chair, Caroline Henry, criticised the deal, which totaled $20 million, including $10 million from ROC Partners and $6.7 million from First State, as “not a good look for the industry”.
The Victorian Business Growth Fund has invested in two recycling companies. Pacific Metal Group is based in Laverton North and Cougar Recycling has operations in Brooklyn and Port Melbourne. A strategic fund created by the Andrews Labor Government, Aware Super and Spirit Super will support new green jobs in recycling.
The investment will enable the business to upgrade processing and collections infrastructure to produce cleaner and more valuable recycled metals, with potential for further acquisitions to better support suppliers and customers.
The combined business employs 36 people and will continue to be run by existing management who have been in the industry for more than 30 years and are passionate about decarbonising steel production.
It is understood the green steel roll-up investment was made on behalf of the Victorian Business Growth Fund, which is a 10-year fund that invests capital on behalf of the Victorian government and First State Super.
Roc Partners, which was appointed to manage the Victorian Business Growth Fund in 2020, oversaw the scrap metal investment on its behalf.
The investment saw the Victorian fund purchase a 50 per cent equity stake in two scrap metal businesses, Pacific Metal Group & Cougar Metals, which would be welded together to create a larger entity.
The fund’s investment would be used to build the scrap metal players’ collections infrastructure, processing equipment to produce cleaner and more valuable recycled metals and potentially further M&A, according to a message sent to Victorian scrap dealers to explain the transaction and the new player in the market.
The Victorian Business Growth Fund has provided essential capital to Converge, one of Australia’s most experienced corporate mental-health-care providers.
Coverge’s approach saves companies money, by creating healthy workplaces that grow a productive and strong workforce. The organisation will create more Victorian jobs and an expansion of their essential services across the state.
Supporting more than two million workers and over 1,300 organisations through the provision of wellbeing services, the organisationis a welcome addition to the VBGF. Converge will now work with the VBGF’s independent investment manager Roc Partners to implement its business objectives.
The Victorian Government and First State Super’s VBGF is backing a proud Warragul-based fresh produce business by providing the capital it needs to create more jobs and expand its operations.
The local company, Flavorite, is the first to benefit from a landmark investment by the Victorian Business Growth Fund.
Owners of Flavorite will now work with the VBGF’s independent fund manager, Roc Partners, to expand the business and explore new product lines and markets – meaning more local jobs in Gippsland and, as they grow, in the Goulburn Valley.