The largest of the UK government’s regional development funds has been launched with GBP50 million to invest in London-based SMEs. The Capital Fund is the seventh out of nine planned funds to become operational. The nationwide initiative is aimed at stimulating private sector investment at the smaller end (sub GBP1 million) of the venture capital market and has so far raised over GBP203 million.
The Capital Fund will be invested over five years in up to 200 fast growing SMEs in Greater London. It will make initial investments of up to GBP250,000 for a minority stake, and is capable of following this with another GBP250,000 after six months. It will invest in most industry sectors and all stages of development from early stage to expansion capital and buyouts.
The fund is managed by London Fund Managers, a division of the investment arm of Yorkshire Enterprise, Yorkshire Fund Managers, and sponsored by the London Development Agency. The fund’s team of five staff, led by Geoff Sankey and Ian Cameron, has already seen over 150 investment proposals, four of which it is likely to take forward to the next stage. The manager is currently focusing its efforts on intermediaries that are able to introduce good investment opportunities.
Investors include Barclays Bank, the Department of Trade and Industry’s Small Business Service, the EIF (which has committed a total of GBP53.5 million to the UK regional funds), London Pensions Fund Authority, The Corporation of London, The London Borough of Brent Pension Fund and Royal Bank of Scotland.
Last year the UK government announced plans for nine regional funds with targets of GBP50 million for London, GBP30 million for both the North West and South East, GBP25 million for the South West and the same amount for Yorkshire and Humberside, GBP20 million each for the West Midlands, East Midlands and East of England and GBP15 million for the North East.