Wednesday, June 15, 2016

News: £2.5m top up for Finance Yorkshire

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Growing businesses across the Sheffield city region (SCR) will still be able to access finance even though the new £400m Northern Powerhouse Investment Fund (NPIF) won't be ready until 2017.

The city region is set to be part of the much larger fund involving all Yorkshire and the Humber Local Enterprise Partnerships (LEPs), the North West and Tees Valley. It is hoped to bring together over £400m, subject to meeting European funding requirements, and tendering for specialist fund managers, who will make the individual investments in smaller businesses, closed last week.

The fund builds on the work of initiatives backed by European money such as Finance Yorkshire - the regional funding body that has invested £105m fund into companies in Yorkshire and Humber.

Now the SCR Combined Authority is being asked to offer Finance Yorkshire a loan (on commercial terms) of £2.5m to bridge the investment gap until December 31 2016 so that it can continue to support firms until the new fund is open for business.

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Originally a £90m fund, Finance Yorkshire operated three investment teams - Seedcorn Finance, Business Loans and Equity Linked Investments. It secured £45m from the European Investment Bank, together with £30m investment from the European Regional Development Fund (ERDF) and £15m from the Government via Yorkshire Forward.

Finance Yorkshire became the first European JEREMIE (Joint European Resources for Micro to medium Enterprise) initiative to become fully invested in England and in 2015 it secured funding from Round Six of the Government's Regional Growth Fund (RGF) and an extension to its investment period until June 2016.

A report to the combined authority states: "Arrangements for the Northern Powerhouse Investment Fund are progressing well. NPIF is on track to be launched in September 2016 and it is expected that fund managers will be investing significant sums from January 2017. This could, without SCR intervention, leave an investment gap between June 2016 and January 2017."

This gap could be detrimental to businesses hoping to secure funds and momentum could be lost. 18 South Yorkshire firms are currently being considered for funding by Finance Yorkshire.

The NPIF was announced in the Autumn Statement 2015. The British Business Bank will also be investing £50m of its own capital into the new fund which will be matched by an additional £50m from the European Investment Bank. LEPs, including Sheffield, are working with the British Business Bank and Department for Communities and Local Government to aggregate the European money they receive into a combined fund.

Bringing allocations together into larger funds will allow more resources to be targeted at businesses with growth potential across a wider area, with economies of scale meaning more money can be invested directly in smaller businesses.

Northern Powerhouse Investment Fund website
Finance Yorkshire website

Images: Finance Yorkshire

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