The Northern Powerhouse Investment Fund has had a huge impact – £838m – on businesses in the North to date, with £334m directly invested and a further £504m attracted through private sector co-investment . With the Tees Valley included in all of the areas it covers, stretching east to west. British Business Bank Director Grant Peggie spoke to TheBusinessDesk.com about the fund’s future plans.
“We are really delighted that the Tees Valley has chosen to participate in the Northern Powerhouse Investment Fund and can see the benefits of joining in on the work we have done so far.
He explained that the decision he hopes has been vindicated by the work that the NPIF has been actively doing in the region through its work with businesses and the Combined Authority.
“Ben Houchen’s support as Mayor of Tees Valley has been fantastic and he’s done a lot of work to promote the fund and also challenged us when he thinks we’re not doing enough and that’s good for our relationship. I think we were able to show him and others that the fund is for all parts of the North, not just Leeds and Manchester, and that like businesses in Tees Valley, Cumbria or Hull are looking for growth financing, we are ready to support them. .”
Peggie noted that 68% of NPIF investment actually went outside of Liverpool, Manchester, Leeds and Sheffield, showing that there is a lot of money “finding good investment opportunities” outside of these central cities.
The strength of NPIF’s approach to Peggie is the regional fund managers who are actually based in the region and focus on each of the regions served by the fund and will rate the business so it says “this It’s not just about the money and we’re not just the computer saying yes, it’s about the support we can offer management and the business beyond just funding.
“The other thing we’re proud of is that it’s not just advanced manufacturing businesses that we support in the Tees Valley, we support businesses across the region’s economy, businesses interesting digital to net zero technology, life science and health businesses that we were able to support.
Some of these companies that NPIF has backed in the past include SockMonkey Studios – a Middlesbrough-based video game developer which was backed by a quarter of a million pound investment by NPIF to fund the launch of its first original game; and Nova Pangea Technologies which is based in Wilton and has received a £2.3 million investment following an NPIF-led funding round which will see the company commercialize its technology to create biofuels and chemicals from biomass waste.
Looking ahead, the strength of NPIF’s sector agnosticism means that Peggie is always on the lookout for emerging trends.
He explained: ‘Life sciences and healthcare, we know there are hubs around Manchester and Leeds, but I think what we’re seeing now is other parts of the north are also strong. In fact, the industry saw our first listing with Abingdon Health, located just outside York, go public in December 2020.
“Clearly the pandemic has pushed life sciences and medical technology onto the agenda and I think that’s really exciting. But it’s also fascinating to see how advanced manufacturing is growing and we’re moving away from traditional methods for new processes, and that’s tied to net zero and how companies are finding new, more efficient ways of working. It will continue to evolve.
“When we sat down in 2015/16 and launched the NPIF, we didn’t really know what was going to happen to the economy, we couldn’t predict a pandemic, we didn’t know what Brexit would be like and the situation in Ukraine and the current supply chain crisis were not on the agenda, however, despite all this economic turmoil, we are pleased to have been able to adjust the fund and address some of these challenges.
“Certainly during the pandemic we were able to provide debt guaranteed by CBILS to companies that could not obtain it from their bank and that in itself was an interesting journey for us because we were able to help very good companies quality across the north.”
The impact of the pandemic on the exposure of the British Business Bank – which manages the NPIF – to companies has been significant. Before Covid, the bank worked with 80,000 small businesses across the UK and now has 1.6m small businesses in its portfolio, while the amount under management has risen from £7bn to £88bn sterling over the same period.
“But what is important is that we are now working with companies, who perhaps before Covid-19 forced them to think about it, would have said that finance was not for them. Thanks to the support that received, they are again looking at what their options for growth are and what support we can perhaps offer them through our fund managers.
Looking ahead, Peggie says the next iteration of the fund – tentatively known as “NPIF 2” – “must be up and running by December 2023”, which is when the current NPIF ends. to invest because the bank “does not want an interruption or for companies that are struggling to finance themselves.
“We have set ourselves this deadline so that there is a seamless transition, companies being able to obtain investments from the new fund from January 2024, for example. That gives us 18 months to get it up and running, so we’re building the analysis and the evidence base. now, building on what worked and what didn’t work in the first NPIF and talking to Combined Authorities and LEPs as part of that.
What NPIF 2 will look like, well, Peggie reflects on the evolution of the current fund and its ability to be nimble and respond to unforeseen challenges.
“Obviously none of us have a crystal ball, so we need the fund to be flexible and nimble and able to respond to whatever is happening in the economy and its impact on business.
“Now that we’ve left the EU there will be changes in the rules, as before we couldn’t support FinTechs or nuclear supply chain companies directly, so now that’s gone we have to take advantage of these freedoms to make sure that we support these companies in these sectors that can be really important for the future economy.
“I think the main thing is that we have proven that the model and the importance of having a physical presence in the areas where we operate works – and there were doubts at the start. In fact, we have already exported the concept in the Midlands through the Midlands Engine Investment Fund and we are now looking to do similar things in Scotland and the South West.
“With regard to NPIF 2, we now have the opportunity to advance and support businesses and achieve more positive outcomes by supporting innovation, job creation, skills development and ultimately account, regional economies and UK plc!”