15 June 2010

Fund Managers announced for The £185m North West Fund

• 6 fund managers announced for 6 funds which comprise The North West Fund
• The North West Fund (formerly the NW VCLF) to receive applications this summer
• The £185m North West Fund is the largest public fund of its kind in the UK
• Over £200m of private sector leverage will facilitate funding of around £400m
• 14,000 jobs to be created/safeguarded and over £700m GVA expected

Northwest Business Finance Ltd (NWBF) with support from the Northwest Regional Development Agency (NWDA) and the European Regional Development Fund (ERDF) can today (15th June 2010) announce the successful fund managers for The North West Fund.

The North West Fund will be a new £184.8m evergreen fund for Northwest businesses (previously known as the Venture Capital and Loan Fund or VCLF) and will be one of the largest public sector funds of its kind in Europe and the largest in the UK. Between 2010 and 2015 the Fund is expected to create/safeguard almost 14,000 jobs and improve the economic performance of England’s Northwest with an estimated GVA increase of £700m. The fund will be ready to receive applications for funding between July and August 2010.

The North West Fund is the umbrella name for the 6 funds that will be available to businesses in the form of debt, equity and quasi-equity. These funds will be managed by 6 fund managers under contract with NWBF. NWBF has been established to oversee the delivery of the Fund, under the Joint European Resources for Micro to Medium Enterprises Initiative (JEREMIE) in the Northwest.

Initially, £170m of The North West Fund will be allocated to the 6 Fund Managers following a 10-day standstill period*. The Fund Managers then have a mandate to invest their allocation into the specific product or sector they manage, between July 2010 and December 2015. The £15m remaining will be available for further allocation and investment through to the end of 2015.  Such further allocations will be made as investment needs become more apparent.
Four out of the six proposed fund managers will be setting up bases in the Northwest for the first time as a result of their appointment by The North West Fund, which in turn will create new jobs and bring in new expertise to the region. The 6 funds and successful fund managers to be appointed following standstill are:

Fund Manager	Name of Fund	Fund Committed	Offices in the region new and (existing)	Employees dedicated to The North West Fund (FTE)
YFM Private Equity	Development Capital	£45m	(2)	11
FW Capital Ltd	Business Loan	£35m	3	12
Enterprise Ventures Ltd	Venture Capital	£30m	(3)	12
Spark Impact Ltd	Biomedical	£25m	1	4
CT Investment Partners LLP	Energy & Environmental	£20m	2	5
AXM Venture Capital Ltd	Digital & Creative	£15m	2	4
Total		£170m	13 (8 of which will be new)	48

     
The North West Fund is made up of a £92.4m ERDF grant, making it the biggest ERDF project of the 2007-13 programme, and a £92.4m loan which is expected from the EIB. In addition to this funding, the 6 Fund Managers appointed, have been targeted with securing over £200m of co-investment capital from a wide range of sources including; finance angels, banks, pension funds, venture capital, private equity investors, and other private funds.  It is expected that this initiative will generate total funding in excess of £400m.

Mark Prisk, Minister for Business, said:
"I welcome this investment in the North West, which will provide an important boost for the region’s economy. In these difficult times, focusing support on the sectors that are able to create jobs and opportunities is vital for stimulating growth and getting our regions on track for recovery.  It is one of Government's key priorities to ensure that this North West Fund and all other national and regional provision in future will become part of a strong, single and coherent offer of finance and investment for dynamic and growing businesses."

In total, the appointed fund managers will operate 13 offices across the Northwest and, at peak, are expected to employ 48 (FTE) professional staff based in the region focused on deploying and managing The North West Fund. 

The NWDA has led the development and creation of The North West Fund from drawing-board to launch and will continue to support it until 2015. The combination of the Agency’s expertise and knowledge has delivered a significant evergreen fund which will help hundreds of businesses to grow.

Robert Hough, Chairman of Northwest Regional Development Agency (NWDA), said:
“The NWDA has been working hard with various bodies in the UK and Europe to secure this vital fund for the Northwest.  It has taken longer than originally anticipated, but it has certainly been worth the wait. Next month Northwest businesses will have access to one of the largest support funds of its kind in Europe. It is an important initiative that will leverage hundreds of millions of pounds of private sector investment and, as an evergreen fund, will benefit businesses in our region for many years to come.”

Andy Leach, Chief Executive Officer of NWBF said:
“I am delighted that, after a robust procurement and selection process, we are now able to announce the appointment of the fund managers who will be delivering The North West Fund across the region.  The fund managers we have appointed are a combination of established regional players and new entrants to the region, bringing experience and expertise, especially in our chosen priority sectors”.

Lord Daresbury, Chairman of NWBF, said:
“The opportunity that The North West Fund provides to create an enduring legacy for the Northwest - both in financial terms and through the skills, jobs and businesses it will bring to, support or create in the region - is truly exciting. Given the current economic climate and the difficulties that SMEs are experiencing in securing the finance they need, it is also especially timely.”

Liz Meek, Chair of the ERDF Programme Monitoring Committee, said:
“The appointment of fund managers is good news for businesses in the region which will benefit from their expertise in key areas and also from the access they provide to finance in a testing economic climate.”

Each of the 6 funds have been designed specifically to support businesses in the Northwest:
Development Capital:
Expansion Capital for SMEs to provide flexible equity and loan packages to support weaknesses in the market and to invest alongside other sources of private capital in the Northwest market. Typical expansion capital structures can include equity, quasi-equity (mezzanine) capital and loan support. This fund will have a broad sector range, outside those targeted by the specific priority sector funds, but with an emphasis and focus on the regional economic priority sectors, including technology.

Business Loan:
Loans between £50,000 to £250,000 will be available to SMEs for growth businesses with actual or potential revenue streams, but whose investment and funding needs are not fully met by the banking sector, including the Enterprise Finance Guarantee Scheme. In general the loan terms will require security, including, at the Fund Manager’s discretion, a degree of personal security from the owners of the SME.

Venture Capital:   
Early Stage Finance for SMEs across the broad range of new businesses covering proof of concept, pre-start, start-up, seed capital, gap venture finance and venture capital funding, including follow-on investments. This fund will have a broad sector range, outside those targeted by the specific priority sector funds, but with an emphasis and focus on the regional economic priority sectors, including technology.

Priority Sector Funds - Biomedical; Energy & Environmental; Digital & Creative:
Priority sectors, which often require specialist investment manager skills, are extremely important to the delivery of the Northwest Regional Economic Strategy and growth in the region’s economy. These three priority sectors have been selected for focused investment, given the skills and expertise that already exist in the region and the growth that they are expected to exhibit over the next few years.  As well as supporting existing businesses and individuals in these sectors within the region, it is expected that the availability of funding in the Northwest for these sectors will stimulate many inward investment opportunities for The North West Fund.  These Priority Sector Funds will provide both venture capital and development capital investment.

The North West Fund will officially go live and will be ready to take applications between July and August 2010. An event to mark the official launch of The North West Fund will take place in September.

ENDS

Notes to Editors:

* The 10-day standstill period refers to a legal requirement. With immediate effect, all procurements subject to the full EU procurement regime must be subject to a mandatory standstill period of at least 10 days between declining unsuccessful tenders and the actual award of contract. This standstill period is to allow unsuccessful tenderers the opportunity to challenge an award decision.

The Northwest Fund – structure:

NWBF – The new private, not for profit, company, established to oversee the delivery of The North West Fund, under the Joint European Resources for Micro to Medium Enterprises Initiative (JEREMIE) in the Northwest.

NWBF Chairman - Lord Daresbury is the Chairman of NWBF Ltd. Peter Daresbury is Chairman of several companies including, Aim listed Nasstar PLC, Stellar Diamonds PLC, Mallett PLC and Aintree Racecourse.

NWBF Board - The board for NWBF is made up of senior and experienced figures from across the professional services sector across the region and includes:
• Peter Daresbury, Chairman
• John McGuire, Former MD of the Corporate Banking Division, for Royal Bank of
Scotland Group
• Michael Prince, Former Corporate Partner for DLA Piper
• Clive Brook, Former Corporate Finance Partner at PKF
• David Read, Head of Business Finance, NWDA

NWBF Investment Advisory Panel - NWBF has an experienced independent Investment Advisory Panel, whose role is to provide advice from time to time, to the NWBF Board, and includes:
• John McGuire (chairman)
• John Nicholson
• Clive Brook
• David Read
• Andy Leach
• Brenda Smith
• Anthea Harrison
• Hazel Moore
• Andrew Graham

NWBF Chief Executive Officer - Andy Leach, has 24 years experience in the Private Equity market, latterly as Portfolio Director with LDC in the Northwest, the leading UK regional mid-market private equity house and part of the Lloyds Banking Group.

Fund Manager process:
NWBF operated an open public procurement process and received 39 bids across the 4 Lots/6 Funds. These bids were appraised and validated, and approved by the independent NWBF Investment Advisory Panel, NWBF Board and the EIF, acting as advisors to EIB.

European structure, JEREMIE:
The JEREMIE initiative offers EU Member States, through their national or regional Managing Authorities, the opportunity to use part of their European Union (EU) Structural Funds to finance small and medium-sized enterprises (SMEs) by means of equity, loans or guarantees, through a revolving umbrella fund. The initiative was developed by the European Commission (EC) and the European Investment Fund (EIF), which is part of the European Investment Bank (EIB) Group.

JEREMIE provides for a range of debt and equity financial tools to obtain the most appropriate allocation of funds according to national, regional or local requirements.

The North West Fund is funded by a European Regional Development Fund grant under the 2007-13 programme and is matched equally by private sector loan funding. The North West (JEREMIE) Fund will run for an initial investment period up to the end of December 2015.

ERDF in the Northwest:
The European Regional Development Fund (ERDF) is making a real difference to people and businesses in the Northwest. With €755 million to invest between 2007 and 2013, ERDF is enhancing the competitiveness of the region’s economy by supporting growth in enterprise and employment.

ERDF in the Northwest is managed by the Northwest Regional Development Agency (NWDA).

For further information please visit www.erdfnw.co.uk

The European Investment Bank (EIB):
The EIB is the European Union’s long-term financing institution and, provides long-term finance  for capital projects promoting European economic objectives. The EIB made its first loan in the UK in 1973 and since then has lent around €75bn for investment in the UK economy. In the years from 2004 to 2009, the EIB financed investment in the UK totalling some € 23.5bn - GBP 17.5 billion.

The Northwest Regional Development Agency (NWDA):
The NWDA works to deliver economic success in England’s Northwest by building the competitiveness of its businesses, people and places. Utilising our technical expertise and strategic influence, we help the region’s 250,000+ businesses to develop and grow, as well as supporting international trade and encouraging inward investment.