New £17m funding pot to spark business growth

23/10/2006

TWO new investment funds worth a total of £17m go live tomorrow aimed at helping smaller North East companies with big ambitions reach for success.

The funds will offer targeted loans and equity to small and medium-sized firms struggling to raise finance from traditional sources, helping them grow and plan ahead with greater certainty for the future.

The launch of the Evolve Mezzanine and NEL Growth Funds brings to £115m the total amount of finance made available to regional firms over the past six years through publicly backed investment.

Hugh Morgan-Williams is chairman of North East Regional Investment Fund Limited (NEIF), one of the primary backers of the two new funds.

“The completion of these funds means the North East can boast that it has more money available to invest in small and medium-sized businesses per head of the population than any other English region,” said Mr Morgan-Williams.

Barclays Bank has also contributed substantially to the funds. Steve Walker, Barclays Relationships Director, said: “Barclays is delighted to be involved in these latest funds.

“Their establishment has been an excellent example of public and private sectors working together for the benefit of the region.”

Malcolm Page, One NorthEast Director of Corporate Resources, said: “These two new funds complete a comprehensive suite of funding underpinned by publicly backed investment – helping some of our most dynamic companies at critically important stages in their evolution.”
 
The Evolve Mezzanine Fund offers unsecured loans of between £15,000 and £500,000 - together with an equity option - to companies with strong business plans, experienced management teams and a specific financial requirement that cannot be met by traditional sources.

It will be managed by Evolve Finance, the specialist debt and mezzanine finance division of Gateshead-based NEL Fund Managers Limited.

NEL also manages the £5m NEL Growth Fund, a fast-track funding stream of between £50,000 and £350,000 into companies with high growth potential, with a maximum of £500,000 being invested in any one business. 

Both funds will be launched tomorrow, Tuesday October 24, at Durham County Cricket Club, Chester-le-Street, at 11am.

Two businesses to benefit from a previous round of publicly backed funding are Hexham-based renewable energy specialists Econnect and development travel company Madventurer of Newcastle, who will tell an audience of financial experts how they put the money to good use in their businesses.

Both accessed finance from the North East Investment Fund – which houses the new Evolve Mezzanine Fund – to help with company development.

John Lawler, Madventurer Managing Director, said: “NEIF funding took Madventurer to the next level – our mainstay had been student gap year travel and this funding has allowed us to realign ourselves in the marketplace to get into corporate and career break travel.”

Guy Nicholson, Chief Executive of the Econnect Group, said: "As a renewable energy business we achieved 35% annual growth for a decade in an embryonic market through organic growth.  The NEIF funding is giving Econnect the funding to increase that growth rate to over 50% per annum as the renewables industry takes off."

The European Regional Development Fund contributed 45% of the finance of both new funds.

Peter Smith, Head of European Programmes at Government Office for the North East, said: “More than half of the European funding in the North East is dedicated to supporting business. We have pioneered support for access to finance, through cutting edge funds that other regions are looking to replicate.”

Steve Garbutt, Evolve Fund Manager, said: “The new funds follow on from the extremely successful £18m NEIF3 fund, which closes at the end of the year, and provides access for North East businesses to another very significant tranche of investment capital.”

Potential investee companies must be based within the North East and have traded for at least 12 months. The Evolve Mezzanine Fund will also support management buy out or buy in transactions. Loans are unsecured and are typically structured to be repaid over a period of up to four years.

John Cuthbert, Managing Director of Northumbrian Water, said: “These funds provide an essential support to some companies on which the region will depend for its future success.

“Northumbrian Water is already a significant investor in the region through its own capital programme and is delighted to help provide the opportunity for others to grow as part of its partnership approach to building sustainable communities in the North East.”

Douglas Robertson, Director of Business Development and Regional Affairs at Newcastle University, said: “Access to funds for company growth and development is critical for the future success of the North East economy and these funds are to be welcomed.”

Early stage technology venturing company NStar is launching a £2m investor readiness programme to help regional firms better access the new funds and prepare their business to make the maximum use of the finance.
 
Businesses requiring more information on NEL’s investment criteria should visit www.nel.co.uk or call 0845 111 1850.

For further information please contact:
Gordon Arnott, Senior Press Officer, One NorthEast.
Tel:(0191) 229 6309   Fax:(0191) 229 6234 Mobile: 07713 317883
e-mail: gordon.arnott@onenortheast.co.uk