Support fund set to create jobs in region

The Business Growth Fund (BGF), which is backed by five major banks and has a capital of up to £2.5bn, is looking for entrepreneurs who take a long term view.

It has announced its first investment in the north of England, which should help to stimulate economic activity at a time of slow growth.

It is making a £3.25m investment in the Manchester-based street food chain, Barburrito, which has a branch in The Headrow, Leeds.

Other investments are expected to be announced in Yorkshire soon.

Andy Gregory, BGF’s regional director for the north of England, said: “The pipeline across the North is good and it is particularly strong in Yorkshire.

“There are a couple of things in due diligence right now. They are both very high growth businesses with long term capital.

“There are lots of companies with ambitious, quality management teams.”

Although Mr Gregory could not say anything further about the potential investments, he stressed that BGF had a “non-sector specific” approach.

The Barburrito transaction is BGF’s fifth deal in three months, making it one of the most active investors of long-term growth capital in the UK. So far, it has invested £37m.

Founded in 2005 by Manchester based entrepreneurs, Morgan Davies and Paul Kilpatrick, Barburrito is a chain of Mexican restaurants that offer healthy food to eat in or take away.

The business operates from six sites in Leeds, Manchester, and Liverpool and employs more than 100 people.

Its net revenues for the last financial year were £4m. and like-for-like net sales are up 20 per cent on last year.

Over the last two years the business has invested heavily in operations, branding and its supply chain to help it grow rapidly.

BGF’s £3.25m equity investment will fund an expansion programme.

The business plans to triple its number of restaurants to around 18 sites over the next four years. The bulk of the new restaurants will be in prime locations in London.

As a result of this expansion, Barburrito expects to create around 250 jobs.

Mr Davies and Me Kilpatrick are believed to be the first people to open a burrito bar in the UK.

Before founding Barburrito, they successfully developed and sold an upmarket single site multi-cuisine takeaway business, called Globe Delivery.

In 2009, they joined forces with industry veteran Richard O Sullivan, the co-founder of Millie’s Cookies, who has supported the rapid growth of the business as non-executive chairman

Following BGF’s investment, Colin Hughes will join the board as a non-executive director.

Mr Hughes was previously on the boards of Pret a Manger and EAT, where he was involved in opening 100 sites.

Mr Gregory added: “Barburrito has a fantastic product, a strong vibrant brand, ambitious management and an excellent operational platform.

“These are strong foundations for growth and the basis for our decision to invest.

“Having established the UK’s first ever burrito bar, Morgan and Paul have successfully pioneered fresh Mexican food in the UK and it is fast becoming one of the most popular parts of the food and drink market.”

Mr Davies, the joint MD and founder of Barburrito, added:

“We have made great progress since starting as a single site in 2005.

“In the last two years we have opened three new stores and doubled the size of the business. We believe that the time is right to roll out our formula to a national customer base.”

The business will be helped by Ward Griffiths Associates to identify sites for the expansion programme. Barburrito was introduced to BGF by the corporate finance and investment business Seneca Partners.

Legal advisers to BGF were Pinsent Masons and financial due diligence was undertaken by Grant Thornton.

The existing shareholders were advised by FreethCartwright and Hill Dickinson.

[email protected]