THE head of the Business Growth Fund in Scotland, Andy Gregory, has underlined its appetite for deals as the investment business celebrates what it regards as a successful first five years in business.

The bank-funded organisation said it has invested £135m in 17 companies in Scotland since it was formed in May 2011 to fill a perceived funding gap for growing smaller and medium sized businesses.

Its portfolio includes technology companies such as M Squared Lasers, oil services businesses including the STATS Group pipeline firm and the Arran Aromatics toiletries operation.

The number of deals completed in Scotland means the fund has been busy by the standards of the private equity industry in Scotland.

Activity levels in Scotland fell after 3i decided to focus on big deals and closed its offices in the country.

Mr Gregory said BGF had established itself as a popular source of funding helped by having a policy of taking minority stakes in firms and holding them for the long term.

Some private equity firms have been criticised for running the firms they invest in with a focus on generating short term returns.

Mr Gregory said: “There’s no shortage of innovative small and mid-sized businesses coming to talk to us. We have an appetite to continue to invest and to support local businesses to achieve their growth ambitions.”

The Business Growth fund has invested £850m in total to date. Chief executive Stephen Welton said: "With a very healthy pipeline I am confident we will pass £1billion later this year.”

The fund was formed with backing from five banks, including Royal Bank of Scotland and Lloyds Banking Group, following complaints that lenders were not doing enough to support small firms.