In a significant move to boost sustainable economic growth, the British Business Bank is launching two new investment funds, Midlands Engine Investment Fund II (MEIF II) and Northern Powerhouse Investment Fund II. With a total commitment of £1.6 billion, these funds aim to provide much-needed support to small and medium-sized businesses (SMEs) in the Midlands and the North of England. The Nations and Regions Investment Funds will not only increase the availability of early-stage finance for UK SMEs but also break down barriers and improve access to finance for businesses that would otherwise struggle to secure investment.
MEIF II, a £400 million investment fund, will build upon the success of the existing Midlands Engine Investment Fund, which has been operational since 2017. Throughout the pandemic, this fund played a vital role in assisting smaller businesses, driving regional economic growth, and highlighting the Midlands’ reputation for innovation. Since its inception, the Midlands Engine Investment Fund has injected over £200 million into the Midlands, helping to create more than 2,370 jobs across 595 businesses in the region. This new fund will further strengthen the economic prospects of the Midlands by expanding the availability and diversity of early-stage finance for small businesses, ensuring that innovative and ambitious ventures have access to the funding they need to grow.
The Northern Powerhouse Investment Fund II, with a substantial investment of £660 million, will cover the entire North of England, including prominent regions such as Greater Manchester, Liverpool City Region, Yorkshire & the Humber, and more. This fund will address the identified funding gap in the North and build upon the success of the previous Northern Powerhouse Investment Fund. The range of commercial finance options offered by the fund includes loans ranging from £25,000 to £2 million and equity investments up to £5 million. By increasing the supply and diversity of early-stage finance, this fund will provide crucial support to smaller businesses in the region, offering opportunities to firms that may otherwise struggle to secure investment. It aims to break down barriers and ensure that businesses have the financial resources necessary to drive sustainable economic growth.
The success of the first Northern Powerhouse Investment Fund is evident, having facilitated over £1 billion of investments into northern businesses and playing a pivotal role in job creation and opportunities. However, it is recognized that the levels of private debt lending and equity investment in the North of England remain below expectations given the region’s share of the UK’s smaller business population. The new generation of the fund will continue to address this disparity by supporting ambitious businesses and nurturing sustainable economic growth. With investment funds operating across three tiers, offering smaller loans, debt financing, and equity investment, a wide range of businesses will benefit from the financial support available.
The launch of Midlands Engine Investment Fund II and Northern Powerhouse Investment Fund II by the British Business Bank marks a significant milestone in driving sustainable economic growth in the Midlands and the North of England. These funds will not only increase the availability of early-stage finance for small businesses but also break down barriers and improve access to funding. By supporting innovative and ambitious ventures, these investment funds will play a vital role in fostering regional economic development, creating jobs, and unlocking the true potential of SMEs in these regions. With a commitment of £1.6 billion, these funds demonstrate the UK government’s dedication to strengthening the economy at the regional level, empowering businesses, and driving sustainable growth.
(Source: British Business Bank)