Region’s businesses secure £382m of UK equity investment
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Businesses in the West Midlands secured 3% of UK equity investment in 2020, according to data released today.
Analysis from the British Bank found that smaller companies in the West Midlands saw a total of £382m in equity deals last year, up 266% from £104m in 2019.
Despite the large annual increase, the West Midlands remains under-represented in its share of UK equity investment, compared to the region’s share of UK high growth businesses.
Seven per cent of British Business Bank fund supported equity deals went to companies in the West Midlands in 2020, ahead of the overall equity market at just three per cent.
The Bank’s supported equity deals are becoming more regionally diverse, with deals undertaken in London reducing sharply from 68% in 2016 to 42% in 2020.
This shift signals a positive change for regional businesses and has been driven by increased activity from the Midlands Engine Investment Fund (MEIF) and the bank’s range of equity programmes.
Across the region, the share of equity deals involving MEIF has increased from 20% of all announced deals in 2019 to 25% in 2020. The fund has provided finance to over 350 smaller businesses in the West Midlands, East and South Midlands.
Dr Sophie Dale-Black, UK network director, Midlands at the British Business Bank, said: “The West Midlands is home to many innovative and ambitious businesses which we can see through the notable increase in value of equity investment being secured to unlock growth, develop new technologies and bring products to market.
“While it is positive that there appears to be a continued shift away from regional imbalances in terms of access to finance, it is clear that there is a long way to go to fully realise the potential in the West Midlands and unlock further growth for smaller businesses.”
Overall, the figures show that equity investment in the UK’s smaller businesses increased by nine per cent in 2020 to £8.8bn, the highest annual investment amount since the data series began in 2011.
The Equity Tracker report also revealed that a key contributing factor to the growth of UK equity finance deployed has been increasing investment in deep tech companies, which has grown rapidly in the past five years – rising 291% to £2.3bn in 2020.
The strong momentum in the UK is continuing into Q1 2021, with the total equity investment in smaller businesses reaching £4.5bn.
This is the highest amount ever recorded in a single quarter.