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Surprise departure of Investment Bank head after only a year in post as growth strategy launched

Gerard Kelly, head of Scottish Enterprise's early stage equity body Scottish Investment Bank, has left the organisation only 13 months after its launch, the Sunday Herald can reveal.

Gerard Kelly, former head of the Scottish Investment Bank
Gerard Kelly, former head of the Scottish Investment Bank

Kelly's departure under "voluntary severance" last Friday, the last working day of the financial year, comes only two months after he reaffirmed his commitment to the £95,000 a year role in an interview with The Herald.

Belfast-born Kelly, 52, who has spent almost all of his working life in SE and its predecessors, announced his departure in a letter to colleagues and clients on Wednesday, before serving his last day in post on Friday. Kerry Sharp, previously director of portfolio management for SIB, will become acting head of the organisation.

The surprise decision has prompted speculation about boardroom-level disagreement over the priorities and performance of the funding body, which has attracted criticism for not doing enough to fund early-stage Scottish businesses in a time of economic hardship.

Scottish Enterprise yesterday declined to comment on the circumstances behind his departure

Lena Wilson, chief executive of Scottish Enterprise, said: "Gerard has made a significant contribution to Scotland's economic development over the years and I wish him every success in the future."

Announced by the First Minister at the STUC conference in 2009 but launched nearly two years later, the SIB is essentially a rebranding of Scottish Enterprise's existing early-stage funding bodies, and lacks the normal functions of a "bank".

Supported by the European Regional Development Fund, the body uses £55 million of public funds as the cornerstone of a fund supported by Lloyds Banking Group, Royal Bank of Scotland, Clydesdale and Santander banks and the Strathclyde Pension Fund, with the Glasgow-based Maven private equity firm vetting applications and awarding loans to early-stage companies through the Scottish Loan Fund. Kelly is known to have fought hard for control of the SLF before bowing to the fact that the private sector would not back it unless it was managed privately.

Other parts of the SIB include the Scottish Seed Fund, which provides equity investment from £20,000 to £250,000 for early-stage companies, the Scottish Co-investment Fund (£100,000-£1m) and the Scottish Venture Fund (£500,000-£2m). Some £143m of Scottish Enterprise and government money has been distributed under these schemes leveraging a further £323m from the private sector and ERDF.

David Grahame, chief executive of business angels body LINC Scotland, said: "Gerard did a great job of leading the investment team at Scottish Enterprise during a period of strong development in its relationship with private-sector partners in the investment community. This gave rise to a number of world-leading innovations, particularly the Scottish Co-Investment Fund. We hope Scottish Enterprise will want to sustain and grow this partnership to ensure that it fully realises its great potential to deliver economic benefit for Scotland."

A spokesman for Scottish Enterprise said: "Gerard is one of a number of staff leaving the organisation this week under voluntary severance as part of our continuing drive to reduce our management costs. While we can't comment on individual packages, the overall savings generated will ensure any costs are recouped within the next two years."

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