Vibrant investment sector drives SME growth with strong pipeline assured

A range of multimillion-pound investment deals have been struck to support business growth across the North West in the coming months and years.

The North West team of mid-market private equity firm LDC has celebrated a record year, completing transactions with a combined enterprise value of more than £500m in 2021.

In its annual performance summary, LDC, the private equity arm of Lloyds Banking Group, said it will increase its support for mid-market businesses across the North West, underpinned by a commitment to invest in at least 100 medium-sized businesses nationally over the next five years.

In 2021, the team’s investments included Rochdale-based wireless surveillance products supplier WCCTV, Warrington preventative healthcare specialist PAM, Alderley Edge software company IEG4 and developer of mobile, console and PC board games Marmalade Game Studio.

The firm also exited successful partnerships with Middlewich-based SRL Traffic Systems, after supporting the business to more than double revenues through increased investment in its fleet and network of depots, and the sale of Speke-based ChargePoint, following a four-year partnership that saw the specialist manufacturer develop new products and accelerate a successful international growth strategy.

In addition, LDC’s North West team helped its portfolio to acquire businesses to build scale and resilience. It supported environmental compliance specialist SGI Compliance to make an acquisition to expand its services into industrial water treatment and helped marketing group MSQ to make three acquisitions to further enhance its services.

The North West team also recruited two new investment professionals, Grant Goodwin and Camilla Greenwood, as investment managers. Grant joined from Ardenton Capital where he was a senior investment manager in the Manchester office, while Camilla previously spent more than six years at PwC working in transaction services and external audit.

Dale Alderson

Dale Alderson, partner and head of North West at LDC, said: “We have been really impressed by the desire from management teams to deliver on their growth strategies over the past 12 months. The resilience and ambition of the region’s business leaders has been remarkable, and we’re proud to be celebrating a record year in supporting local businesses to achieve their growth targets.”

Meanwhile, Chester-based Enterprise Investment Scheme (EIS) investment manager Deepbridge Capital has deployed more than £100m of capital via the Deepbridge Technology Growth EIS fund.

The Deepbridge Technology Growth EIS was launched in 2013 as one of the first growth-focused technology EIS funds, providing private investors with access to a portfolio of early stage investee companies across various intellectual property-rich sectors, including energy and resource innovation, hardware technologies and IT-based developments.

With more than 30% of the fund having been raised within the past two years, the fund’s capital has been provided UK-wide to 38 companies to date, with investee companies based across England, Northern Ireland, Scotland and Wales.

The Deepbridge Technology Growth EIS raises capital from private investors, with approximately 90% of funds raised via financial advisers, and typically fully deploys investors’ capital within a month of receipt, which, according to research platform MICAP, is amongst the quickest in the EIS market.

During the 2020/21 tax year, Deepbridge reported a record year of EIS fund raising, with almost £30m of funds deployed across the Deepbridge Technology Growth EIS and Deepbridge Life Sciences EIS.

In April 2021, Deepbridge secured a £15m commitment from the British Business Investments’ Regional Angels Programme, which is designed to reduce regional imbalances in access to early stage equity finance for smaller businesses across the UK, to be invested over three years, matched with capital raised via Deepbridge’s investors.

Founded in 2010, Deepbridge specialises in providing venture capital to early-stage technology, life sciences and renewable energy companies, and currently manages in excess of £210m of funds. In addition to its EIS funds, Deepbridge also manages the Deepbridge Estate Planning Service, which utilises business relief qualifying renewable energy assets to provide inheritance tax mitigation.

Ian Warwick

Managing partner, Ian Warwick, said: “The Deepbridge Technology Growth EIS portfolio is maturing well, which is now being demonstrated by the commercial successes of the investee companies, the significant co-funding our companies are attracting, and the investor exits achieved. We are currently working with a number of our portfolio companies on potential exit opportunities which will further validate our approach to EIS investing.

“In the last tax year, for every pound of EIS funding raised we were able to support our investee companies in attracting a further two pounds of co-funding. This is a continuing theme this tax year and evidences the quality of investee companies we are working with.”

Another funder, specialist asset-based lender Ultimate Finance, reported its best loan book levels during a busy year for the business, which operates a city centre Manchester operation.

It provided combined funding of more than £1.9bn to UK SMEs in 2021, with in excess of 1,300 new facilities to help keep business moving. Its loan book grew to a record high of £280m.

The newly released figures show that Ultimate Finance finished the year with multiple record performances in key areas of the business which, along with £220m of new wholesale funding facilities recently announced, puts the funder in a strong position to support SMEs with their growth plans in 2022.

The asset-based lender’s portfolio highlights include:

• Providing new funding of £125m through more than 1,300 new facilities, including a record annual performance for new business in asset finance of £46m
• Delivering its highest ever total funding advances to clients of £1.9bn
• Loan book growth hitting a record high of £280m, up £40m on 2020’s close
• Reaching new record high loan books in asset finance and bridging finance, both more than £75m
• Strong client performance across its working capital products, with record levels of invoicing, high client retention and a loan book recovery back to pre-COVID levels

Josh Levy, CEO of Ultimate Finance said: “2021 was a transformational year for Ultimate Finance, regularly beating new business records and setting new high loan book figures at a group and product level. Having secured £220m of new wholesale funding facilities in recent months, we have the firepower, appetite and desire to support even more SMEs.”