Partner Article

North East Growth Fund investments exceed £20 million landmark

The value of investments made by regional fund management firm NEL Fund Managers from the Finance for Business North East Growth Fund has passed the £20 million mark.

Since the fund launched in early 2010, NEL has made 100 investments from it with an average deal value of approximately £200k.

The landmark was reached with NEL’s six-figure investment in Seaham-based business collaboration and ICT solutions provider Powerdial Services, which is using the capital to help it treble its turnover over the next three years by expanding its operations both at home and abroad.

The Growth Fund is a general investment fund aimed at businesses at a development and growth stage based anywhere in the North East, and was set up with a view to creating 1,500 new jobs in the region, as well as helping to safeguard a further 1,300 jobs.

The £20 million figure represents the original value of the Growth Fund, and it was increased by a further £3 million in summer 2013 by North East Finance, the holding fund manager with overall responsibility for the £142 million Finance for Business North East initiative, to help maximise the number of firms across the region that it could support.

Nineteen North East businesses have secured follow-up Growth Fund investments from NEL after their first ones helped them successfully implement business development plans.

NEL, which already has capital in place to provide a seamless transition into the months after the Growth Fund investment period completes at the end of March 2015, currently has a number of further proposals at different stages of the application assessment process, and is still looking to hear from regional firms that have development funding needs.

Chief executive at NEL, Barrie Hensby, said: “Reaching this landmark is a fantastic way for us to close one of the most successful investment years that NEL has had in our 25 years in business.

“The impact that our investments make in terms of sustainable employment, supply chain spending and wealth creation is clear, and their positive impact on both individual firms’ capacity to grow and on the wider North East economy will be felt for many years to come.

“Even in the most difficult economic period of the last five years, we’ve had a lot of interest in the Growth Fund, which is clear testament to the enduring ambition and innovation that has always characterised the North East business community.

“The returns we’ve already made, and will continue to make to the Growth Fund’s investors will add significantly to the planned JEREMIE 2 funds which will come on-stream at the beginning of 2016, and which will maintain the crucial flow of development capital that is available here.

“The type of mezzanine funding we offer remains very attractive in comparison to equity investments, and the rate of investment enquiries we’re receiving is still as high as it’s ever been.”

Chief executive at North East Finance, Andrew Mitchell, added: “The fact that the Growth Fund has reached this fantastic milestone is evidence that the Finance for Business North East programme is working effectively.

“It is creating jobs, fuelling business growth, generating wealth and sustaining the local economic recovery.

“The programme is ideal for businesses that have struggled to secure mainstream finance but require additional funds to assist their growth plans. Money from the scheme is still available for companies looking to expand their operations and take on extra staff.”

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