Merseyside firms ‘missing out’ on private equity

MERSEYSIDE businesses are missing out on potential private equity cash, according to Professional Liverpool.

A new report by the business membership group has revealed that the value of corporate finance activity brokered in Liverpool grew to almost £100m in the first half of 2012, an annual increase of 17.5%.

But private equity played a smaller role with a 25% fall in the value of deals that used this type of funding.

According to the report, compiled in conjunction with Experian Corpfin, cash was the single largest element of the 47 deals, half of which were completed outside the North West.

The use of venture capital was also popular, increasing by 55%. Of the 47 deals, 14 were financed with private equity and 14 used venture capital. No breakdown was available based on value.

Steve Stuart, chairman of Professional Liverpool’s finance group, said: “We have seen a steady increase in the overall value of corporate finance deals, which clearly bodes well in terms of commercial confidence and growth.

“However, we have also experienced a significant dip in private equity finance, which is often the best way for many businesses to finance a step change in the current economic climate as it allows them to receive an injection of working capital to support their development goals.

“There is a cash mountain waiting to be invested and we would urge more of the region’s companies to gear up to receive this kind of investment. This is especially important in light of the recent reduction in ERDF contributions to North West Business Finance.

“Only when businesses begin to explore and take up alternative sources of investment will we begin to see a return to the halcyon days of growth prior to the collapse of the financial markets.”