Wednesday, October 26, 2016

News: £400m Northern Powerhouse fund managers identified

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European funding for the new £400m Northern Powerhouse Investment Fund (NPIF) looks to be safe but delays to its launch has led to an investment gap in the Sheffield city region.

The Sheffield city region is set to be part of a large 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.

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.

The NPIF is expected to launch substantively in January 2017, slightly later than originally envisaged, and includes £162m of European Structural Funds, agreed prior to the EU referendum.

Chancellor Philip Hammond recently confirmed that all structural and investment fund projects signed before the upcoming Autumn Statement will be fully funded, even when these projects continue beyond the UK's departure from the EU.

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The Sheffield-based British Business Bank will also be investing £50m of its own capital into the new fund which is hoped to be matched by an additional £50m from the European Investment Bank. In August, the British Business Bank said that it is working closely with Government departments and other stakeholders to reach agreement and sign-off before the Autumn Statement.

Tendering for the appointment of a number of specialist fund managers – who will make the individual investments in smaller businesses – has recently concluded. Contracts have been awarded to AXm VC Limited, Enterprise Ventures, Foresight Group, Maven Capital Partners and Viking Fund Managers c/o Finance Yorkshire.

The delays to the launch of the NPIF has led to an "investment gap" in the Sheffield city region. The existing JEREMIE fund, which provides debt and equity finance to small and medium-sized businesses (SMEs) no longer has capital to invest. JEREMIE stands for Joint European Resources for Micro to Medium Enterprises.

To bridge the gap, the SCR Combined Authority approved an offer to Finance Yorkshire (the "holding fund" for the JEREMIE) of a loan (on commercial terms) of £2.5m until December 31 2016 so that it can continue to support firms until the new fund is open for business. A number of South Yorkshire firms were being considered for funding by Finance Yorkshire.

Now changes to the offer have been sought that would enable Finance Yorkshire to invest alongside Leeds City Region on an equivalent basis. Changes would also allow for extensions or variations should an unexpected delay to NPIF occur.

Changing from a loan to a repayable grant, the combined authority is expecting a small positive return on the £2.5m and fund manager fees will not be paid in the event of nonperformance. Unspent money will be returned.

Northern Powerhouse Investment Fund website
Finance Yorkshire website

Images: British Business Bank


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