A £2.5 billion investment fund set up by the UK’s major banks has opened its doors in Birmingham.

The Business Growth Fund, whose operations will be based in the city, is looking to back small and medium-sized firms to help them achieve their full potential.

The fund will set up a network of regional offices, with the Birmingham base at One Victoria Square opening first and branches in Edinburgh and London set to open soon.

Business Growth Fund chief executive Stephen Welton said: “The Business Growth Fund represents a new collaborative approach to financing growth by investing equity capital in Britain’s most dynamic businesses.

“This will give businesses the boost they need to create new products and services, sell to new markets and create new jobs.

“Companies of this size have often struggled to secure financing to support their growth plans – too big for start up funding and too small to tap into larger commercial funding.

“We are responding to that need.

“We will not only provide longer-term finance but will also offer ongoing help and advice, working closely in partnership with the businesses that we back.”

The fund is backed by five of the country’s biggest banks, and was set up in the wake of criticism that the sector was not doing enough to help small business.

Earlier this month the Business Growth Fund said had it appointed a former 3i man to manage investments nationally from its base in Birmingham.

It has taken on Richard Bishop as its first head of investments, whose previous roles included running the Birmingham office of 3i.

He has a banking and finance degree from Birmingham University and is currently on the board of SLR, AES Seals and MKM

The BGF also recently announced the appointment of veteran industrialist Sir Nigel Rudd who takes on the role of chairman.

When up and running, the fund will take minority stakes of between £2 million and £10 million in UK firms, as well as typically taking a seat on the board of the companies.