Midlands Engine Investment Fund ‘on track’ after uncertain start

L-R: Lauren Tunnicliffe (British Business Bank), Jon Whitmore (Rent Chief), Patrick Shuker (Rent Chief), David Baker (Mercia)

The Midlands Engine Investment Fund has significantly increased the rate it is getting money to the region’s businesses after doubling its lending since January.

More than £15m has been committed in the last five months with the fund appearing to have now got past a troubled start.

The £250m fund was trumpeting a “£50m milestone” at an event held in Leicester although it has so far committed £31m with the remaining £19m leveraged from the private sector.  It has made more than 150 investments in firms across the Midlands.

In January, TheBusinessDesk.com revealed that just 6% – or £15m – had been paid out to firms.

The fund was announced by George Osborne in his final Budget in March 2016 but problems with the procurement process meant that it was not until August 2017 that the first £120m became available.

It was another six months before applications opened for the £92m allocated to the equity finance funds.

“The Midlands Engine Investment Fund is on track,” said a spokesperson from the British Business Bank. “Both our debt and equity funds are now well established in the marketplace across the East and West Midlands.

“By hitting our second investment milestone months after the first £25million, we are demonstrating our commitment to supporting Midlands businesses and delivering regional economic growth.”

The MEIF is split between six fund managers with Maven Capital is responsible for providing loans of up to £1.5m and has £50m for the West Midlands and £40m for the East Midlands.

The small business loans funds, which can provide loans of up to £150,000, are managed by BCRS, which has £17.5m to distribute in the West Midlands, and First Enterprise, with £12.5m for East Midlands businesses.

One of the Fund’s latest deals in the West Midlands was a £250k investment in Birmingham-based Rent Chief. The firm which was founded by serial entrepreneurs, Patrick Shuker and Jon Whitmore, is to use the equity finance to launch its online property management platform to the market.

The fund’s equity finance is split between three fund managers with Midven and Foresight receiving £34.5m each to operate a venture fund in the West and East Midlands respectively. Mercia Fund Managers has £23m for its proof of concept and early stage equity fund that covers the whole of the Midlands.

The taxpayer-funded MEIF has consistently refused to provide any breakdown of the performances of the individual funds and again has declined to do so.

The £250m MEIF brings together funding from Government, the European Regional Development Fund, British Business Bank and European Investment Bank.

The 10 Midlands Local Enterprise Partnerships (LEPs) have redirected £79m of their European funding from a 2014-2020 programme into the MEIF.

Communities Secretary and Ministerial Midlands Engine Champion Rt Hon James Brokenshire MP, said: “As Midlands Engine Champion in Cabinet, I am determined the Midlands should harness its full potential and be at the heart of an economy that works for everyone. A community where businesses and people can thrive, through well-paid jobs, high standards of living and greater economic growth are at the very core of our ambitions for people in this area.”

Patrick Magee at the British Business Bank, said investment can often be crucial in allowing firms to explore emerging opportunities and expand, without it growth stalls.

“By hitting this milestone, only months after passing the £25 million mark, we are reaffirming our commitment to Midlands’ businesses, providing much needed investment and helping many fulfil their growth ambitions.”

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