Regional funds attract GBP200m

A new GBP200 million fund has been set up to target small- and medium-sized businesses in Cornwall, Merseyside, Wales and Yorkshire. The European Commission is investing over GBP92 million and Barclays is the main provider of private sector finance, committing GBP84 million to the venture from its recently-formed urban and regional economic development unit. In addition, regional pension funds in Cornwall, Merseyside and South Yorkshire are providing almost GBP24 million.

The funds will provide equity and loans packages to businesses that want to start up or expand. There will be a strong focus on the provision of management expertise, as a part of the funding package. Packages will range from GBP3,000 to over GBP1 million.

Over the next ten years it is hoped the funds will create almost 19,000 jobs, safeguard over 10,000 jobs, assist over 3,000 small- and medium-sized businesses and help set up over 400 new businesses.

The venture will be modeled on the Merseyside Special Investment Fund (MSIF), which has been running since 1996. In that time it has invested GBP31 million in over 500 businesses. Chairman of MSIF Mike Davis said “We know from experience that the funds will make a real difference in terms of job creation, the levering-in of private sector investment and the development of a vibrant entrepreneurial culture.”

MSIF has backed companies such as The Play People, which was the subject of a management buyout earlier this year. This Merseyside company, which trades under the names Hunt Play Systems and Hope Adventureplay, designs, manufactures and installs adventure play systems. The deal comprised funds from the management team and cash from MSIF’s venture fund, the Royal Bank of Scotland and NatWest. Turnover is currently in excess of GBP3.5 million and is expected to double over the next two years.