How SMEs can power Ireland’s growth

It’s no surprise that much of the conversation in Ireland around the impact of tariffs has centered on multinationals and the potential hit to corporation tax receipts here. However, given Ireland’s SME sector is a key driver of social and economic stability, representing the vast majority of firms and the bulk of employment, it’s important to also take stock of how this indigenous sector is faring too.

Global instability and uncertainty of the scale we are currently seeing ripples through every aspect of the economy, challenging business confidence and decision making in a massive way. But just like other geopolitical events that came before; Brexit, Covid-19 and the Russia-Ukraine energy crisis, with the right advice and support businesses can adapt accordingly.  

On tariffs, it’s still not clear what the impact will be on the Irish economy but there is no doubt that there will be many challenges. At Foresight we have a forty-year track record of investing through multiple economic cycles, so we know it’s also important to identify potential opportunities.

Ireland’s economy may not be able to rely on an FDI-led model in the future, and this represents a great opportunity for our SMEs to bridge the gap and develop a strong stable of well managed and funded medium sized enterprises that can drive job creation and exports. Ireland’s future prosperity will depend on building a twin-engine model, by maintaining its multinational base while scaling indigenous champions across every region.

By helping more SMEs move from owner-managed to professionally scaled businesses, we can create a generation of mid-sized firms capable of exporting, innovating and sustaining high-quality local employment. We have a great track record of doing this as a country and have built world-leading companies in building materials, food and beverages, aircraft leasing, technology and more recently in the data centre sector.

Foresight has already supported some of Ireland’s most dynamic SMEs in sectors ranging from medical technology and childcare to digital transformation and green infrastructure. Each investment demonstrates how supportive capital, and active partnership can accelerate growth, create skilled jobs and deliver measurable impact across the economy. 

SMEs are central to Ireland’s economy and we’re lucky to have a strong small and medium sized business community in Ireland with exceptionally talented management teams. Many of these businesses have inherent potential to grow further and with the support of private equity could transition into significantly larger and more valuable businesses.

Our goal is to help those businesses achieve that growth but we’re passionate about providing far more than just the capital to do so. It is important to us that we are a supportive partner and that through our people and experience we help management teams navigate complexity and uncertainty. We describe this as a partnership model of investing: supportive, hands-on, and focused on long-term value creation.

Our team works side-by-side with founders to professionalise systems, strengthen governance, and open new markets. We are helping our management teams not only withstand uncertainty, but turn it into opportunity. The businesses we back typically generate between €0.5m and €4.0m EBITDA, but we can support pre-profit companies that provide decarbonisation related services.

We are making these investments from our AIB Foresight SME Fund, which typically invests €2-5m with the ability to invest up to €10m. Our style of investment is to combine new capital and strategic support to deliver a tangible value-add to our partner businesses.    

We are always on the lookout for new growing companies and founders to support, across all sectors and transaction types.  We also provide replacement capital to allow shareholders to partially release equity in their business ahead of planned growth and transition to a future exit; and can also allow shareholders to fully exit and allow the existing management team to continue to run the business.  

We are also keen to work with infrastructure project developers who want to leverage Foresight’s significant track record in developing energy transition infrastructure, by providing capital and support to accelerate the development and commissioning of their solar, wind, battery, biomethane and other renewable projects.

Foresight has a strong track record in Ireland and is supporting the development of two large scale projects of national significance: the Silvermines pumped storage hydro project in Co. Tipperary and the MaresConnect interconnector project which will further connect the Irish and UK electricity grids.

Beyond these flagship infrastructure projects, we also see growing opportunity for Irish SMEs to participate directly in the energy transition, as suppliers, service providers and innovators. From advanced manufacturers supporting clean-tech deployment to specialist contractors delivering energy-efficiency solutions, smaller enterprises will be critical to achieving Ireland’s 2030 climate goals.  

Many small and medium sized businesses we’re in contact with tell us that while they do feel exposed to global politics and trade uncertainty, they’re staying positive. Many are still reporting modest growth but there is no doubt that rising costs in relation to wages, energy and insurance are resulting in tighter margins and testing resilience in a big way.

SMEs play a vital role in employment, innovation and regional development and their strength and success has never been more important. According to the CSO, SMEs account for over 99% of active enterprises and more than two-thirds of private-sector employment in Ireland, a reminder that our economic resilience depends first and foremost on their continued success. They are the backbone of Ireland’s economy, and we should all play our part in ensuring they have the support they need to thrive.  

Ireland’s SMEs have a once-in-a-generation opportunity to build a more self-reliant and sustainable economy. At Foresight, we see every investment as a chance to build enduring value, for the business, its employees and the communities it serves. 

Our five-strong Irish investment team are always keen to speak with ambitious business owners and founders who share that vision.