British Business Bank adds €58 million Soho Square deal to recent run of UK investments

The British Business Bank continues its recent spree of investments in British innovation with a cornerstone commitment of €58 million (£50 million) to Soho Square Capital Fund II, aimed at helping established SMBs that wish to grow further. The Bank is joined by several unnamed US institutional investors in the fund.

Soho Square Capital, founded in 2021 and headquartered in London, is a lower mid-market investment firm that provides structured capital solutions to support UK-based, founder-owned businesses during periods of transition, such as adopting new technology, scaling, or making an acquisition. The firm offers an alternative route to funding through a primarily debt instrument, while also providing partnership capital to support portfolio companies' growth.

The second fund will target established companies in the government's Industrial Strategy key growth sectors, with a preference for digital and technology, as well as professional and business services. At least 75% of the fund will be invested in the UK, with a particular focus on businesses across the UK's nations and regions. Target companies typically have EBITDA of up to €17 million (£15 million) and turnover of up to €235 million (£200 million).

Adam Kelly, Managing Director and Co-Head of Funds at the British Business Bank, stated that this commitment directly addresses a gap in the debt market, unlocking flexible capital solutions for established businesses with strong growth potential. This will create more jobs and drive long-term economic growth across the UK while strengthening modern Industrial Strategy sectors.

Blair McDougall, Minister for Small Business and Economic Transformation, emphasized that through the Modern Industrial Strategy, the government is ensuring businesses with high growth potential have the capital to succeed in the UK, backing dynamic SMEs in key sectors to scale, create jobs, and raise living standards.

Together with the Soho Square commitment, the disclosed capital totals about €606 million, including a €46 million commitment to London-based FPE Capital's lower mid-market growth fund, Tapestry VC's €70 million fund, Lansdowne Partners' €128.9 million first close, and up to €104 million for ten emerging UK fund managers. These deals reflect the Bank's broader use of cornerstone investments to expand institutional funding for UK businesses at different stages of development.