Bank pledges extra support to encourage investment in Manchester SMEs

Keith Morgan

Manchester is among a cluster of UK cities experiencing strong equity investment activity, helping to fund small businesses, a new report by the British Business Bank has revealed.

And the bank says it will put into place measures to encourage this even more over the course of the next few months.

Its fourth annual Small Business Equity Tracker report reveals that the UK equity finance market for smaller businesses has bounced back to record highs in 2017, following a decline in 2016.

The report, which provides an in-depth assessment of equity finance markets for growing businesses, found total investment value soared in 2017 by 89% to £5.9bn, with the number of equity deals increasing by six per cent.

This represents a 50% increase from the previous peak in 2015, signalling signs of investor confidence.

Deal sizes have increased across the whole market, with especially pronounced increases amongst the largest deals.

The technology and intellectual property sectors saw equity investment grow to a record high of £2.1bn in 2017.

And there was a large increase in equity investment in business and professional services – up from £680m in 2016 to £2bn in 2017.

The London region accounted for more than half (51%) of all UK equity deals in 2017, followed by the South East (10% of deals), Scotland (8%), the East of England (6%), the South West (6%), and the North West (6%).

However, the report found clusters of strong deal activity developing around the country including in Manchester, Edinburgh, Bristol, Glasgow and the established equity eco-systems around Oxford and Cambridge.

The British Business Bank said it is now establishing a new commercial programme to support developing clusters of ‘business angels’ outside of London, in cities like Manchester, and will increase its physical presence across the UK by leveraging regional angel groups and a network of regional relationship managers to support this.

This involves the creation and delivery of a commercial angel investment programme to support developing clusters of business angels outside London which will roll out in the Autumn.

Research has demonstrated an imbalance across regions, most markedly in equity finance, and this is one step to help tackle that.

Another measure involves a regional managers network. The bank is already responsible for funds supporting £650m of finance for the Northern Powerhouse and Midlands Engine areas.

It says making sure that finance reaches smaller businesses across all regions of the UK is important to delivering widespread growth, and by putting in place a new network of regional managers, they will further address regional disparities in awareness of – and access to – funding choices for businesses across all regions of the UK.

This roll-out will take place through the Summer.

Keith Morgan, British Business Bank chief executive, said: “After a weaker 2016 the UK’s SME equity finance market saw a record year of growth in 2017 with investment amounts soaring to £5.9bn.

“This is a clear sign of investor confidence in British smaller businesses and their potential for growth.

The British Business Bank continues to work to ensure businesses across the UK can access the equity finance they need to fulfill their growth potential,” he added.