Chancellor Rishi Sunak to announce £ 130million fund to support growth of Welsh SMEs

A £ 130million fund intended specifically to support the growth of SMEs in Wales is expected to be announced by the Chancellor in his budget tomorrow.

The fund, from the UK government’s economic development bank, British Business Bank, will be a welcome development for Welsh businesses seeking an alternative source of growth capital funding to support expansion and start-up plans jobs.

The British Business Bank, which although it has a UK-wide lending mandate including its successful start-up loan scheme, has so far not had funds specifically for businesses from Wales.

It has regional equity-focused funds for the Midlands, the North of England and the South West of England, as well as one for Northern Ireland.

Ahead of his budget, Mr Sunak said: ‘Business in Wales has served communities in incredibly difficult circumstances during the pandemic. As we look to the future, we continue to support small businesses in Wales to help them grow and succeed.

It is not clear whether the Wales fund will have dedicated divisions for debt and equity transactions. The British Business Bank’s equity funds in England are managed by external fund managers.

The Wales fund comes after the chief executive of the British Business Bank, Rhondda-born Catherine Lewis La Torre, confirmed that a specific fund for Wales is under consideration.

This came after research by the bank showed that while Wales has a 3% share of the UK’s business population of high-growth companies and SMEs, in terms of the value of equity transactions, it only secures 0.9% of the UK level – despite having 4% of the actual number of transactions. On debt and overdraft, Welsh companies are slightly above their share of the UK population measure.

The report, Regions and Nations Tracker: Small Business Finance Markets, 2021, found that London, the south-east, north-west and east of England accounted for 86% of investments in equities and 69% of investments in private debt despite only 55% of UK companies.

Research has also shown that fund managers are more likely to invest in companies close to where they are located.

Mr Sunak is also expected to announce a fund of £ 150million for England and £ 70million to build on existing programs in Northern Ireland.

A £ 130million fund for Wales from the British Business Bank could see him co-invest in Welsh businesses with the Development Bank of Wales, which on own funds can invest up to £ 5million. The development bank is 100% owned by the Welsh government.

Business scholar Professor Dylan Jones-Evans, who has always applied for a Welsh fund from the British Business Bank, said: “This is an extremely important development to support ambitious growth businesses in Wales.

“However, it is essential that those who manage the fund are able to bring a new thought to how Welsh businesses are properly supported, especially as Wales has been underfunded for years in the past. ‘venture capital space. “

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