Partner Article

Manufacturing and renewable energy firms fuel activity in North East deal-making market

It’s official: the UK economy is in robust health once again. The International Monetary Fund’s prediction of a 3.2% growth rate this year – almost double the 1.7% recorded in 2013 – is based on strong job creation figures, rising confidence and lower inflation. The economy has already returned to its pre-recession peak of 2008 and the business world is buoyant.

A growth rate of above 3% is no major surprise given the upturn in the UK deal-making sector. The City Legal Index revealed that the number of deals rose by 7.1% to 1,491 in the first half of 2014, with significant activity in the technology, media telecoms and energy sectors.

This positive trend is being replicated in the North East, although growth is being driven by a slightly different sector mix.

Manufacturing, traditionally a bell-weather of the regional economy, has performed strongly with the North East Chamber of Commerce’s latest quarterly report highlighting growth and job creation in the pharmaceutical, automotive and niche technology markets. In the first half of 2014, several debt and equity deals have been struck in these sectors as a result of the £125m Finance for Business North East (FFBNE) programme, a suite of seven funds managed by North East Finance.

Cutting-edge tech firm Generic AI Applications secured a £27,000 investment from the FFBNE Angel Fund to develop its Artificial General Intelligence (AGI) systems, which can be used in a range of applications such as fingerprint analysis and face recognition. The Newcastle-based company is using the money to finance a pilot project that will test out the systems and the concept has already turned the head of Skype founder Jaan Tallinn.

Manufacturing firms are not the only ones making waves in the North East deal-making sector. The burgeoning renewable energy market has also been a hive of activity, with several companies securing investment from FFBNE. One of the beneficiaries is Blyth-based Solar Capture Technologies, which received £200,000 from the Proof of Concept fund to develop products for use in solar power generation.

A glance at the sector-based make-up of FFBNE deals shows just how diverse the North East economy has become. Yes, the region will continue to rely on the big-hitters – Sunderland car giant Nissan and Teesside steelmaker SSI UK spring to mind – but beneficiaries of FFBNE include companies from a wide variety of sectors such as computer games developers, creative agencies, training specialists, bespoke furniture makers and breweries.

We should be grateful for this diversity as it will reduce our reliance on the Nissans and SSIs of this world and make our economy fitter, stronger and healthier in the long term.

By Andrew Mitchell, chief executive of North East Finance

This was posted in Bdaily's Members' News section by Colin Garcia .