As a £2.5 billion equity investment fund prepares to open its doors in Birmingham, Anna Blackaby speaks to the man at the helm about how West Midlands firms can get a share.
The boss of the multi-billion-pound Business Growth Fund, backed by cash from the UK’s six main banks, is likely to spend a lot of time on the road in his new job.
Although operational functions will be based in Birmingham, chief executive Stephen Welton is seeking to establish a network of around five regional offices across the country when it opens for business in April.
With the capital now secured – including an extra £1 billion added as part of the Project Merlin peace deal between the Government and the banks – the Business Growth Fund will invest in UK firms with an annual turnover of between £10 million and £100 million.
Mr Welton said: “We now need to concentrate on building a national network which is going to have an impact around all of the UK, including the Midlands and Birmingham.
“Each regional office will have its own capabilities in terms of making investments on the ground, which is going to require investment offices and analysts supporting them.
“In Birmingham we will have the back office administration for the whole company so that will require additional jobs. We need to build an organisation of substance to deal with the amount of capital we’re planning to invest,” he said.
The Business Growth Fund was established by the six main lenders’ Business Finance Taskforce following criticism that the banks were not lending to help companies expand.
Mr Welton, a former partner at private equity firm CCMP Capital, is joined by veteran industrialist Sir Nigel Rudd who takes on the role of chairman of the Business Growth Fund.
When up and running, it 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.
Opportunity for growth is the key criteria for investment, said Mr Welton, who pointed to emerging sectors such as the green economy as an example of attractive areas.
“We’re going to be pretty broadly based in terms of sectors as we want to support businesses across the economy,” he said.
“The common criteria is they must have good long-term competitive advantages. This is a fund to promote growth and promote successful British businesses.
“It’s not a fund to prop up a business that is not doing terribly well and can’t get capital elsewhere.”
He added: “There are going to be certain sectors of the economy that are newly emerging where we think there will be opportunities.
“If you think of the whole green agenda, that is going to give rise to some very successful industries of tomorrow, whether they be involved in the water industry, wind power or solar power.
“They will be companies that are relatively small today that will be become significant companies going forward.”
Mr Welton said the fund would also consider investing in more established firms which don’t have the same top line growth.
“It could be investing in additional capital equipment within the company to increase productivity or it could be giving the company the opportunity to go after new contracts which will require further employment to expand the operations,” he said.
The fund has been welcomed by local business leaders, who see it as long overdue.
Jerry Blackett, chief executive of Birmingham Chamber of Commerce Group, said: “SMEs have been calling for this sort of support for some time and it will provide a welcome opportunity for many businesses nationwide.
“It is encouraging to note that the Business Growth Fund has indicated that it will look to establish long-term relationships with the businesses its supports.
“Access to finance is important for all businesses, especially in these difficult times, and this is a welcome move by the banks.”