A £145m super fund to support the growth of hundreds of North East businesses will go live early next year after an agreement was signed today.
The North East Fund – formerly known as JEREMIE 2 – will offer different types of equity investments and loans to firms to drive local growth, investment and job creation in the region.
The agreement has been signed by the seven Local Authorities in the North East, North East (SPV) Limited and the Department for Communities and Local Government (DCLG) which has responsibility for the European Regional Development Fund (ERDF) in England.
The announcement has been heralded as a milestone in public sector support for regional business growth and will be a catalyst to access significant European Investment Bank (EIB) investment.
Over the next five years, the North East Fund will pump loan, equity and mezzanine funding into new and existing fast-growing businesses across a wide range of sectors which will spearhead new regional economic growth.
The North East LEP led the project team negotiating for the region, and agreed with Government to develop the North East Fund at the Autumn Statement last year, to ensure that the super fund would be managed and spent exclusively in the North East. It sits alongside the Northern Powerhouse Investment Fund (NPIF) operating in other LEP areas to drive business growth right across the Northern Powerhouse.
The new fund combines ERDF backing with EIB finance and legacy money generated from historical funds which have operated in the North East LEP area since 2003.
It is estimated that the North East Fund could provide financial support for 600 businesses; help create around 2,500 jobs in the next five years and a further 1,000 jobs throughout the life of the fund – and deliver a legacy fund of up to £80m over the next decade for further financial support to companies.
Andrew Hodgson, North East LEP Chair, said: “Securing The North East Fund for investment into our region is fantastic news and the result of many months of hard work by regional partners with Government.
“The agreement signed today with Government ensures the Fund stays in the North East, to back the investment plans of our fastest growing, brightest firms. It is a prime example of public sector partners working together to achieve maximum return for the North East economy.”
Councillor Paul Watson, Chair of the North East Combined Authority (NECA), said: “The first round of funding was a very successful scheme. It’s very pleasing to know that our region has now secured a second funding scheme.
“Businesses need access to finance because it helps them to plan ahead, to grow and expand, and to create jobs and economic growth in the North East.”
Andrew Mitchell, of the Project Team charged by North East LEP with delivering the Fund, said: “This is great news for the region. Despite the uncertainty created by the Referendum, this is a vote of confidence in the North East on the part of the European Investment Bank which will be a key partner in the fund. The commitment of North East LEP, the seven local authorities and Government to delivering a regional fund has been crucial in unlocking this programme.”
Stephen Lightley, Chief Executive Officer of North East Access to Finance Limited, said: “It is great news that Government approval has been secured for the North East Fund and that the North East LEP’s share of the financial legacy of the public sector SME investment funds that invested from 2003 to 2009, is providing a key element of the finance for the new fund. It was always the vision of local stakeholders that returns from these older funds would be redeployed into future funds and now it is being achieved.”
The NECA Leadership Board agreed to put special local authority borrowing powers in place which ensured the North East Fund will be ready to invest in 2017, after the hugely successful Finance for Business North East Fund stops investing in December.
That fund invested £147m into 900 North East and Tees Valley companies and to date has created almost 3,300 new jobs, safeguarded a further 3,300 and brought over £160m of further private sector investment to the region.
It is envisaged that the North East Fund will help finance viable firms unable or partially unable to secure loan funding from the banks and other sources.