The British Business Bank has launched its new Northern Powerhouse Investment Fund II, a £660 million fund set to cover the entire North of England.
The Northern Powerhouse Investment Fund II (NPIF II), aims to build on the success of the initial fund, with the purpose of driving sustainable economic growth by supporting innovation and creating local opportunity for new and growing businesses across the North.
The Northern Powerhouse Investment Fund II will increase the supply and diversity of early-stage finance for Northern smaller businesses, providing funds to firms that might otherwise not receive investment and help to break down barriers in access to finance.
Providing loans from £25k to £2 million and equity investment up to £5 million, the Fund will continue investing into companies operating within the North West, Yorkshire and the Humber and Tees Valley. It is now expanded to include the whole of the North East enabling businesses across the whole of the North to access the Fund to start up, scale up or continue on their growth journey.
Since the launch of the first Northern Powerhouse Investment Fund in 2017, over £1 billion of direct and private sector co-investment has been facilitated to businesses.
One of these is Nova Pangaea Technologies (NPT), a Teesside-based cleantech company that has created a revolutionary process, converting wood residues and agricultural waste into advanced biofuels which are then used to produce Sustainable Aviation Fuel (SAF), a crucial tool in the effort to decarbonise flight.
Securing £2.3 million in 2019 and £900,000 the following year from the first Northern Powerhouse Investment Fund, NPT used the funding to help launch the operation of its demonstration facility and expand its senior leadership team. The funding has also provided the pathway to delivering its first first-of-a-kind commercial plant which will create a significant number of highly-skilled local jobs.
Louis Taylor, Chief Executive of the British Business Bank, said: “The success of the first Northern Powerhouse Investment Fund has proven the instrumental change that access to finance can have for small businesses. From creating hundreds of jobs to developing ground-breaking products, we have seen companies that previously lacked funding options accelerate forward in their growth journeys, which has ultimately benefitted the whole of the Northern economy.
“This is why it was important to continue the Northern Powerhouse Investment Fund into into its next phase. With further funding available, and a greater geographical reach in the North East, the Northern Powerhouse Investment Fund II will engage more stakeholders across the regions, bringing the business community closer together to create more opportunities for entrepreneurs everywhere.”
Sarah Ellerby, CEO at Nova Pangaea Technologies, said: “The Northern Powerhouse Investment Fund’s involvement is one of the key reasons as to why we are in the strong position we are in today. Our NPIF fund manager was willing and able to look deeper into our business and it was clear that the Fund was committed to empowering a Northern business dedicated to offering climate solutions. Since the Fund’s involvement, we’re now partnering with our country’s leading commercial airline, and have established ourselves as a leader in the production of sustainable aviation fuel.”
Nine fund managers have been appointed to manage the Northern Powerhouse Investment Fund II. In the North West, GC Business Finance & River Capital will manage the smaller loans part of the fund (£25,000 to £100,000), FW Capital will be responsible for larger loans (£100,000 to £2 million) and Praetura Ventures will manage equity deals (up to £5 million).
Gary Guest, Fund Director at FW Capital said: "We are delighted to have the opportunity to build on our successful delivery of £173 million of loans to SMEs in the North of England through the first Northern Powerhouse Investment Fund. Our team are excited to support even more established businesses which require funding to help them reach their ambitions. Access to finance can be a barrier to growth for many businesses which may have insufficient assets to support loans from traditional lenders and it is here where NPIF II can make a real difference. We can’t wait to get started delivering the fund and driving innovation, growth and job creation in areas where such investment is critical.”
Kevin Hollinrake MP, Minister of State for Enterprise, Markets, and Small Business, said: “This new fund will unlock millions in equity and loans for SMEs across the North to realise their full potential and builds upon British Business Bank’s vital work ensuring that any small business owner in the UK can scale up and grow.
“SMEs are the engines of growth for our economy and across government we are improving access to finance, cutting red tape and removing barriers to ensure that they can go further and faster than ever before.”
In Yorkshire and the Humber, Mercia will deliver debt finance (£100,000 to £2 million), as well as equity finance (up to £5 million) to smaller businesses with Business Enterprise Fund (BEF) delivering smaller loans between £25,000 and £100,000.
With NPIF II now set to cover the entire North East, NEL Fund Managers (NEL) will provide both smaller loans (£25,000 to £100,000) and debt finance (£100,000 to £2 million) to North East businesses with Maven Capital Partners managing equity deals up to £5 million.
Following today’s official launch in Leeds, the British Business Bank will be holding a roadshow of events for small business finance intermediaries across the region to provide more information about the Fund. Destinations include Newcastle (18th April); Manchester (24th April), Sheffield (30th April).
Further dates for roadshow events in Liverpool, Hull, Lancashire, Tees Valley, York, Cheshire, Durham, Cumbria and Northumberland will be announced shortly.
