Business secretary Vince Cable and senior figures from the world of banking have visited Birmingham to launch a new £2.5 billion investment fund.
The Business Growth Fund, which was set up by the main banks to take equity stakes in UK firms, was officially launched at Birmingham’s Council House in front of an audience of business leaders from across the city.
The nationwide fund will have its operational base in Birmingham and has started looking at applications, with ten businesses already being considered for investment.
The event saw Business Secretary Vince Cable and chief executive of the British Bankers Association Angela Knight come to the city.
Business Growth Fund chairman Sir Nigel Rudd said he had been working with the authorities in Birmingham to get the new fund up and running in the city.
“Birmingham, and the Midlands more broadly, has suffered badly from de-industrialisation and disinvestment over the past 30 years.
“That, I am pleased to say is changing.
“People are picking themselves up from the devastating factory closures and job cuts of three decades ago.
“Today the Midlands’ story is one of renewal and regeneration, especially in Birmingham and the West Midlands.
“That spirit, of picking yourself up, dusting yourself down, and carrying on with optimism is something that we need across the UK as we emerge out of recession.”
The £2.5 billion fund was set up by the banks following criticism they were not doing enough to support SMEs, and will focus on firms with a turnover of between £10 million to £100 million.
It will invest between £2 million and £10 million in individual businesses in return for a minimum 10 per cent equity stake and a seat on the board.
The fund is backed by Barclays; HSBC, Lloyds Banking Group, Royal Bank of Scotland and Standard Chartered, in conjunction with the British Bankers Association.
Mike Whitby, Leader of Birmingham City Council, said the fund was good news for the city’s businesses.
“I am particularly encouraged by the potential of this £2.5 billion fund to fill a growth capital gap for the city’s large SMEs,” he said.
“This fund will help successful businesses to develop, expand and ultimately contribute to the rebalancing of the UK economy.
“Moreover, it will focus on companies whose growth would have a serious impact on the economic health of Birmingham and the Midlands, such as businesses with high-growth potential that own innovative intellectual property, but are facing funding difficulties.”
Business Birmingham, the city’s inward investment programme run by Marketing Birmingham, has been working behind the scenes with the fund to secure its presence in the city.
Marketing Birmingham chief executive Neil Rami appealed to local companies to make use of the fund.
He said: “This city has companies with the potential to create and develop world-class IP, products and services.
“We need to support them and encourage more to establish themselves here. I
“It will be important that local companies come forward quickly to test the growth opportunities that BGF could bring for the city.”
Jerry Blackett, chief executive of the Birmingham Chamber of Commerce Group, said Birmingham was “underweight” in the numbers of high-growth businesses in the city, and hoped the fund would help counter this.
“We believe one reason holding us back has been the difficulty of raising equity at the smaller end of the market, so we look forward to connecting the BGF team to opportunities locally.
“It could make all the difference.”