Category: Funding

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Mecaplast Invest

Nissan deal fuels growth at plastic components manufacturer Mecaplast.

A £1.9m investment from the North East Local Enterprise Partnership has provided vital funding to allow an automotive components supplier to expand its premises and create jobs to handle some major new contracts from local carmaker Nissan.

Mecaplast Peterlee Ltd needed additional space after winning significant new work from the Japanese car giant to manufacture parts for a number of new models being built introduced to the plant in Sunderland.
The company’s average workforce of 85 to 90 has doubled in the last six months as a result of the orders and the funding for additional space on North West Industrial Estate.

Mecaplast’s general manager Steven Tyson said: “After the initial launch period we expect to have around 165 to 170 people, so a net gain of around 80 jobs due to these investments, as well as the safeguarding of many others.”

The company required an additional four large injection moulding machines and the space in which to house them in order to take on the Nissan orders. The enterprise partnership provided £1.9m through its North East Investment Fund loan scheme, via the Regional Growth Fund, as part of an overall investment of £6m in extending the plant and purchasing new machinery.

A £2.5m debt finance deal with RBS/Lombard and Mecaplast’s own investments secured the equipment, while money from the North East LEP financed an extension providing an additional 1,200 metres of production space, 960m2 of warehouse space and 1188m2 of covered vehicle loading space.

Mr Tyson said: “The current commercial property market is quite difficult. Banks are ready to support investments in generic equipment but the big challenge lay in finding finance to extend the plant.
“We’ve spent £2.2m on the building. We applied to the North East LEP for £1.9m, so around 90% of the building costs were financed by this loan. The North East LEP has been very supportive.”

Paul Varley, North East LEP board and investment panel member, said: “Mecaplast is an important part of the Nissan supply chain, and by providing the £1.9m investment financing towards the company’s increased production capacity, the enterprise partnership is supporting jobs at both the car maker and the supplier.

“The automotive industry is a key employer in the region and we applaud Nissan’s decision to award large contracts to a fellow North East firm, keeping the money in the regional economy and creating more and better jobs.”

Mecaplast supplies parts to other car makers from its site in Peterlee including Toyota, General Motors and Renault, but had a turnover of less than £10m during the recession when the car industry was one of the major victims of the economic downturn. The new Nissan contracts will enable the business to significantly increase its activity level.

Mr Tyson said: “This is an enormous investment for a business of this size and we like to see it as the pay-off for some years of hard work in very uncertain times, when we continued to focus on improving our daily operational performance and supporting our customers. This, I believe, convinced them to place orders with us for some important new vehicle programmes.”

“To be sustainable we must be competitive and to enable this we needed to increase our activity level and load our facilities efficiently. Winning these additional contracts against some very stiff competition will help us to secure the medium and hopefully the long term future of the business.

“The nature of the products we make is that they are quite large and don’t lend themselves easily to long distance shipping. We can thus find competitive advantage in being located near to our customer. This obviously makes Nissan a key client in this respect.”

The business, which is part of the larger Mecaplast Group with 26 plants worldwide, now has 15 injection moulding machines, including 3 large 2000T units, running on a five-day, three-shift production pattern.

Cllr Simon Henig, who chairs the new North East Leadership Board of seven councils, said: “The North East LEP’s decision to support this investment shows what can be done when the North East public and private sectors work together for the good of the region.

“I am delighted that Mecaplast has been able to secure its future and has been able to create additional jobs in County Durham.”

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East Sleekburn investment made

The North East Local Enterprise Partnership has agreed £600,000 of funding to start preparations to develop land at a South East Northumberland Enterprise Zone site to attract investors.

The money from the North East Local Enterprise Partnership’s Investment Fund has been granted to Arch The Northumberland Development Company to pay for preparatory remediation and design studies at East Sleekburn.

The former Blyth power station brownfield site was designated an EZ site in 2012 to attract significant investment from the offshore sectors. It is adjacent to the site earmarked for a major biomass plant which was expected to create 350 jobs, but that development recently fell through.

The aim is to market the land to businesses in the offshore industry to create a cluster around the neighbouring Narec site and the deepwater docking facilities offered by the Port of Blyth. The site benefits from Enterprise Zone status but it is likely to require substantial work before it is ready for businesses to move in.

Paul Woolston, chair of the North East Local Enterprise Partnership said:
“There are 10 Enterprise Zones sites in the North East LEP area and they are all at different stages of development. Some have buildings completed and businesses operating, creating several hundred jobs, whilst others are more challenging and at earlier stages of development.

“East Sleekburn is likely to be a more challenging site to develop as it is transformed from its former days as the old Blyth power station site. We need to get this work underway as soon as possible and the North East Local Enterprise Partnership can help to make this happen.

“We have agreed to loan funds from the North East Investment Fund for all the preparatory work. The work will reveal what works need to happen to the site to attract business, what infrastructure is needed, and what needs to be done to get the site market ready. We welcome the Chancellor’s announcement in the Budget to extend the financial incentives for EZ sites for a further three years, which should really help in securing a long term future for this site. ”

The site is central to plans to attract strategic investment to south east Northumberland and develop its offshore industry supply chain, creating jobs and economic growth for the area.

The funding will also be used to produce design development guidance highlighting the opportunities and constraints of the site. This work is expected to take around six months to complete.

Peter McIntyre, Arch Group Managing Director, said:
“Obviously, as a former power station site it has some key infrastructure but we need to assess the degree to which a regeneration programme will need to be implemented to make the site attractive for further investment.

“The aim is to create a major deepwater facility for use for offshore industries, generating significant jobs, investment and partnerships between the Port of Blyth, Narec and the broader Northumberland supply chain.

“This is at the heart of Arch’s core strategy to enable brownfield sites for strategic investment, creating jobs and wealth for the broader Northumberland economy.”

The North East Investment Fund is primarily focused on funding for capital projects designed to accelerate local economic growth and job creation. It includes £25m of Growing Places Fund and £30m of Regional Growth Funds monies.

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First Regional Social Investment Fund to be in the North East

Northern Rock Foundation and Big Society Capital have announced their intention to create a £11.5m social investment fund for the north east of England to support the development and expansion of voluntary and community organisations and social enterprises. This will be the first regional fund of its kind to be set up with Big Society Capital support.

Big Society Capital has committed,- in principle- , to invest £4.5m initially in the fund and Northern Rock Foundation has committed,- in principle- , to invest £3m, subject to completion of negotiations.A North East Social Investment Company will be set up to champion the development of social investment in the region and to oversee the running of the fund during its life,supported by a further £1.5m contribution from the Foundation.

Alastair Balls, Chairman of Northern Rock Foundation, said “The North East Social Investment Company , and its first social investment fund, are being set up to provide an innovative regional strategic solution to developing the market for social investment in the north east and reducing disadvantage, deprivation and social need in north east communities. This is an opportunity to create a seismic shift in the funding landscape of the voluntary, community and social enterprise sector (VCSE) in the region.”

Nick O’Donohoe, Chief Executive of Big Society Capital, said “We are delighted to be working in partnership with Northern Rock Foundation to set up an independent, sustainable and long lasting social investment facility that will catalyse enterprise, innovation and growth in the voluntary, community and social enterprise sector in the North East.”

The proposal for the Fund has been led by Northern Rock Foundation. It has been developed from analysis of the demand for social investment by PwC and also by regional expert Peter Deans, and with support from the North East Local Enterprise Partnership, Voluntary Organisations’ Network North East and social investors and voluntary organisations working in the region.

Jeremy Middleton, Chair of the investment panel for the North East Local Enterprise Partnership said:
“We were pleased to help fund the initial research for the social investment fund and after lengthy joint work it is rewarding to see it come to fruition.It is also great to secure significant national financial support for a North East fund which, of its kind, leads the UK. It is a great direction for Northern Rock Foundation to take and we applaud its leadership of a scheme which has the strength to have real lasting impact across the North East.”

Tees Valley Local Enterprise Partnership has also welcomed the initiative. Stephen Catchpole, Chief Executive, said “We look forward to seeing the new Fund helping to stimulate social investment here in the Tees Valley”.

Subject to completion of negotiations between Big Society Capital and Northern Rock Foundation, the Company will be set up early in the New Year and the Fund will be open for lending by mid- 2014.

Ends

NOTES TO EDITOR

About Northern Rock Foundation:
Northern Rock Foundation is an independent charity and company limited by guarantee, which aims to tackle disadvantage and improve quality of life in the North East and Cumbria. An independent Board of Trustees representing a wide range of interests in the community makes all decisions on governance, finance and policy, supported by a staff of 13.

The Foundation gives grants to organisations which help people who are vulnerable, disadvantaged, homeless, living in poverty or are victims of crime or discrimination. It also supports training, research and demonstration work and gather and share learning from the activities we fund. Where appropriate it seeks to inform and influence wider regional and national policies and practice.

About Big Society Capital:
Big Society Capital isthe world’s first social investment bank. Big Society Capital formally launched in April 2012, with an estimated £600 million of equity to be paid-in over 5 years, of which £400 million will be from unclaimed assets left dormant in bank accounts for over 15 years and £200 million from the UK’s largest high street banks.
Big Society Capital seeks to support the growth of a social investment market in the UK by revolutionising the way in which the social sector is funded. Through supporting the growth of social investment finance providers, Big Society Capital will improve access to innovative forms of financing, and connect the sector to capital markets.

Home / Funding / Page 17

Enterprise Zones drive forward UK industry with foreign investment

Enterprise Zones are pushing the UK ahead of global competitors after attracting even more overseas automotive investment, Communities Secretary Eric Pickles said today.

Since the creation of the North East Enterprise Zone in April 2012, more than 600 jobs have been created.
Four new companies have moved into the A19 zone including logistics firm Vantec, which has invested £22.5m to build a 421,000 sq. ft base providing logistics and warehousing services to Nissan.

In addition GatesheadCollege will create a ground-breaking International Centre for Low Carbon Vehicle Development next to Nissan, providing vocational skills training to benefit local businesses.

The North East Enterprise Zone is one of five firmly behind innovation in the UK’s automotive industry. They are part of the Government’s Automotive Industrial Strategy which aims to secure the long term future of the sector and grow the UK’s share of it, using research and development to stay at the cutting edge of change.

Announcing the creation of a new European Technical Centre for Swedish automotive safety systems manufacturer Haldex, at the MIRA Enterprise Zone in Leicestershire, Eric Pickles said:
“We have acted fast to tackle the deficit. We are now focused on backing the industries of the future, growing the private sector and making Britain a great place to do business.

“When international companies invest here it shows we have got our offer right. Every 20 seconds a car, van, bus or truck rolls off a UK production line and Enterprise Zones are magnets for the global motor industry with the best international businesses choosing them as their home.

“This is just the beginning – Enterprise Zones are at the heart of our long-term economic plans. They are already making a big difference, attracting increased investment to the UK – half a billion pounds so far – and creating over 4,600 jobs in just a year and a half.”

Secretary of State for Business Vince Cable said:
“The British car industry is a big national success story. This year it has attracted more than £2.5 billion of investment and created 5,000 new jobs. Haldex’s decision to base its European Technical Centre at MIRA shows we are an attractive place for international companies to do business.

“The Government’s industrial strategy is clearly working and giving business the confidence to invest and create more high skilled, long term jobs in the UK. We have launched the £3 million Automotive Investment Organisation – a specialist team dedicated to winning overseas investment in the UK car industry. We have also committed more than £1 billion over the next 10 years to ensure the UK maintains its leading position on researching and developing greener car technology.”

Paul Woolston, chair of the North East Local Enterprise Partnership, said:
“The LEP’s North East EZ land adjacent to Nissan has proved to be extremely popular. With keen interest from two major employers the first parcel of land was released to Vantec which now operates one of the sector’s most efficient and productive logistics operations from the site.

“This was the first EZ site in the country to have a major development underway, and it has been followed up with adjacent investments in R&D and grow-on space by Zero Carbon Futures and Gateshead College. The site is ideally suited to take advantage of the country’s only test track dedicated to low carbon vehicles which runs alongside the EZ.

“In addition, Sunderland City Council’s £6m Washington Business Centre on the EZ will be open in Spring 2014 and is ideally placed for businesses serving the advanced manufacturing and low carbon industries. Over the road, on the final phase of this EZ site to be released, a combination of public funding from the RGF, ERDF and the North East LEP’s Investment Fund will be used to develop the necessary infrastructure that will accommodate the growth of a number of prospective occupiers.

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£60m low-cost borrowing to create 11,000 jobs

North East LEP bid for Government loans approved.

Urban regeneration projects in Tyneside and County Durham are set to benefit from a £60m injection of cash to boost regional growth and create an estimated 11,000-plus jobs.

The North East Local Enterprise Partnership’s (LEP) proposal for £60m of Government borrowing at reduced rates has been approved by the Treasury. The green light was given to the full amount that the Local Authorities in the area were able to access under the discounted Public Works Loan Board (PWLB) scheme, which was announced by Chancellor George Osborne in last year’s Autumn Statement.

The Urban Cores Project, developed by the local authorities in the area, aims to improve urban infrastructure, encourage private sector investment and create 500 short term jobs and a further 11,000 in the longer term.

Paul Woolston, chair of the North East LEP said: “The Urban Cores Project is an ambitious programme, which will help us to deliver the LEP’s vision of ‘more and better jobs’ for the North East, and provide the enabling infrastructure to attract private investment in our urban centres.

“The North East’s towns and cities are the region’s major centres of employment and by improving the urban property offer and urban access, there is the potential to create thousands of quality jobs both now and in the longer term.”
The Urban Cores Project has three strands – providing the enabling infrastructure, improving the urban property offer and improving urban access.

In Newcastle, it covers work at the 12-hectare city centre site being developed as Science Central, and will improve access at the Stephenson Quarter and Central Station development, where a mixed use scheme has been approved.

Cllr Nick Forbes, Leader of Newcastle City Council, said: “The additional borrowing flexibility provided by the PWLB will help us invest a further £28m between now and 2015/16, stimulating growth and contributing to the creation of 7,000 additional jobs in Newcastle.”

Gateshead is set to benefit from investment of £15m. The money will be used to help create the North East’s first low-carbon district energy scheme. It will provide a stimulus for private sector investment in the Accelerated Development Zone and central Gateshead area and help tackle residential fuel poverty. The investment will also develop the Digital Quay project at Baltimore House in the Baltic Business Quarter, which will provide accommodation for growing SMEs.

Leader of Gateshead Council, Mick Henry, said: “The developments in our Accelerated Development Zone are expected to create more than 4,000 jobs. The investment will allow us to provide a real competitive edge to businesses locating or expanding in the area.

“The district energy scheme in particular will provide businesses with low-cost, low-carbon heat and power. It will also help to reduce construction costs by creating a network that is ready for developers to tap into. When energy costs are such a major consideration for so many businesses, we’re confident that this project will help us to attract new investment into Gateshead.”

South Shields 365, South Tyneside’s £100m masterplan for town centre renewal, will use £12m of PWLB money to develop the town’s new central library and community hub, which will include retail and leisure space.

Cllr Iain Malcolm, Leader of South Tyneside Council, said: “South Shields 365 is an ambitious vision for a town with fantastic potential, and we have already selected a top national developer to help us make it a reality.

“The loan will allow construction of a new landmark building to start next summer, as well as helping to attract further investment from the private sector.”

In Durham City, the project aims to create a high quality gateway into the city close to the mainline railway station. The £5m scheme includes works to open up North Road and create opportunities for future retail development at this vital gateway to the city.

Cllr Neil Foster from Durham County Council said: “We plan to start work on the gateway scheme next summer, releasing sites for redevelopment by the private sector. We anticipate the scheme will lead to between £25m-£35m of private investment in the area over the next three to five years.

“As well as demolition and construction jobs, the development of North Road will provide accommodation for businesses and the potential for an additional 500 jobs.”

The approval of the North East LEP’s bid to the PWLB means that work on the Newcastle, Gateshead, South Tyneside and County Durham projects will be able to start once the borrowing has been approved by the individual councils.

Home / Funding / Page 17

£2.6M Investment from LEP for Blyth Workspace

A key development at Commissioners Quay, Blyth has got the go-ahead following the North East Local Enterprise Partnership’s award of £2.6m from its North East Investment Fund.

The £2.6m is the final piece in the funding jigsaw and means Blyth Workspace, a landmark office development which aims to attract businesses connected to the offshore, subsea and marine sector, can get underway.

The development will be built at the LEP’s North East Enterprise Zone site in Blyth, which offers added benefits for investors. Commissioners Quay is close to Narec, (National Renewable Energy Centre) and the Port of Blyth, Northumberland, both pivotal to the region’s offshore energy market.

Blyth Workspace will offer over 30,000 sq ft of office space in a four storey office block with flexible terms for inward investors.

Michael Bellamy, North East LEP board member and general manager of Cramlington-based PII Pipeline Solutions, said: “This is an important new development for Northumberland and the wider LEP area. It fits the LEP’s priorities well, by assisting in the development of the Enterprise Zone site at the Port of Blyth and bringing superb office space close to the waterfront, designed to attract new inward investors in the offshore, marine and energy sectors. The North East Investment Fund is ideal for projects such as this, which aim to regenerate and attract new life, jobs and investment to underused land.”

The development has also received funding support from the North East European Regional Development Fund (ERDF) Competitiveness Programme 2007 – 2013 and the Homes and Communities Agency.

Ronnie Campbell, MP for Blyth Valley said: “This is excellent news for Blyth, with regional funds from the LEP being used in a targeted way to grow the town’s business prospects. The offshore and renewable sector is already well-represented here with Narec, which is internationally recognised for its innovative work. The Workspace scheme adds to Blyth’s distinctive strengths in this market, and I’m delighted that the first bricks will be laid this year following funding from the LEP’s North East Investment Fund.”

Andrew Mill, Narec’s chief executive said: “Narec’s facilities are world-class and we are working with the LEP and others to galvanise manufacturers, suppliers and the whole river system to service the offshore energy sector.
“We are now ensuring we have our assets in place, such as Blyth Workspace, so we can attract international manufacturers into the UK. The knock-on effect of that will create opportunities for suppliers to set up close by, which will stimulate serial manufacturing on our rivers.”

Blyth Workspace is the centrepiece of a wider mixed use scheme at the Commissioners Quay site being developed by Arch, the Northumberland development company. Construction of Blyth Workspace will begin in winter 2013 and be completed in 2015.

Councillor Dave Ledger, Arch Group Chair and Deputy Leader of Northumberland County Council said: “It’s great news that the North East LEP has approved £2.6m funding for Blyth Workspace. It gives the green light to a development which is central to the transformation of this area. It will be great to see work begin and watch the waterfront change, ready for new business in the future.”

Northumberland County Council recently gave planning permission for the Blyth workspace development.

Councillor Grant Davey, Leader of Northumberland County Council and North East LEP board member, said: “I’m delighted that the LEP’s investment panel has approved the funding. The regeneration scheme will bring a new dimension to Blyth estuary, and puts in place the best possible conditions to attract major offshore and marine investment to Northumberland in the future. It also breathes new life into an area of Blyth close to the town centre, and will have an impact on the town and the wider region.”

Martin Lawlor, chief executive of the Port of Blyth said: “We have seen record-breaking sales at the port last year and Blyth is now one of the most prominent renewable energy-related ports in the UK. The North East LEP’s investment fund completes the funding for an important part of the Port’s expansion – a modern, purpose-built office building to house companies associated with the area’s growth.
“It’s good to see that the Enterprise Zone around the Port of Blyth is bringing major new benefits to the town and the North East such as this key regeneration scheme.”

The North East Investment Fund is a £55m loan fund managed by the North East LEP. It has already invested £25m in local projects and the LEP is looking for further projects in which to invest and help grow key business sectors across Northumberland, Tyne and Wear and County Durham.

Further information from Christine Holland, Holland PR & Marketing Ltd. Tel 01670 790246 or 07711 698246.

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North East LEP awarded £7.5 million from Regional Growth Fund

JKP Event Sept 2012-207

The North East LEP has been awarded £7.5m from the fourth round of the Regional Growth Fund to boost the resources available to support small and medium sized companies.

Following the LEP’s previous success with a £30m programme from round three of the RGF to support strategic infrastructure development, this programme will fill a gap in the supply of loan and equity finance to SMEs.

Jeremy Middleton, North East LEP Board member with responsibility for access to finance, said: “The decision to support the North East’s small and medium sized businesses with this contribution from the Regional Growth Fund is great news. Discussions have already begun about how to bring other sources of funding to bear so that this £7.5m from the RGF is multiplied many times over and creates even more employment growth. This is an important time for companies seeking to take advantage of growth opportunities but who continue to see constraints on some forms of bank finance.

“Through an extension to the Finance for Business scheme (the ‘ North East JEREMIE’) that North East Finance manages on behalf of the region I hope that many concerns about a shortfall of appropriate finance will be allayed.

“The investments made with this money will be carried out by people based in the region who have an intimate knowledge of our companies and the discretion to make a decision based on that knowledge and their long term relationships with the region’s entrepreneurs.

“As an evergreen fund the money will ultimately be recycled and made available for more companies to grow; to echo Lord Adonis we are on our way to becoming the best place in the UK to start a new business. We will continue to work on funding for those companies and sectors that the JEREMIE cannot reach, including our thriving cultural and creative sector.”

Geoff Hodgson, Chairman of North East Access to Finance said:
“I am delighted to learn that the North East LEP has been successful in its application for funding from the Regional Growth Fund for the extension to the North East JEREMIE programme. This funding is vital in ensuring that North East SMEs continue to have access to finance.

“There is clear evidence that there would be a real detriment to companies, employment growth and the wider access to finance infrastructure if there was any interruption in regional access to finance provision. Through North East Finance we will work closely with stakeholders to ensure this funding is made available to SMEs as soon as possible.”

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The Future of Regional Banking Event

The future of regional banking will be the focus of an event that has attracted high profile national banking and finance experts to the Baltic on Friday 7 June.

It will include presentations from Anthony Thomson, founder and former chairman of Metro Bank, the first new bank on the high street in over 100 years, and Greg Clark MP, Financial Secretary to the Treasury.

They will be speaking alongside Sam Woods, Director, Domestic UK Banks Division, Prudential Regulatory Authority; Victoria Raffe, Director, Authorisations, Financial Conduct Authority; Jeremy Middleton, chair of the North East LEP’s investment panel; Gary Wilkinson, Cambridge@Counties Bank; Sarah Green, Director, North East CBI and Dr Thomas Keidel, Director and Head of Financial Market Relations, Deutscher Sparkassen.

The event has been organised by IPPR North with support from the North East LEP and the Financial Services Forum.

Anthony Thomson will reveal the issues and challenges he faced in launching Metro Bank and offer observations on the new regulatory landscape. He will also discuss whether the future lies in new regional banks, dealing solely with regionally-based businesses, organisations and individuals, or new banks that happen to be based in regions?

Victoria Raffe of the Financial Conduct Authority will talk about the FCA’s role in the new regulatory framework, what the FCA’s competition and consumer protection objectives mean in practice, and how they have to be balanced when considering applications.

Jeremy Middleton, chair of the North East LEP’s investment panel will discuss the North East’s access to finance, including bank and asset finance, venture capital funding and working capital funding.

Sam Woods of the Prudential Regulatory Authority, which was launched in April 2013 as one of the successors to the Financial Services Authority, will look at banking competition issues and regional banks, and at the wider regulatory backdrop.

Gary Wilkinson of Cambridge and Counties Bank will explain the remit of this business bank, launched last year to focus on providing loans to, and receiving deposits from, SMEs. He will discuss the challenges of authorisation as a new player andthe bank’s progress, including its customer experiences during the last year.

Banking Minister Greg Clark MP, Sarah Green of the North East CBI and Dr Thomas Keidel of Deutscher Sparkassen will also be speaking.

Following the presentations, speakers will answer questions from the audience in a panel chaired by Guy Opperman MP, to discuss the pros and cons of regional banking.

The Adonis Economic Review, commissioned by the North East LEP, recommended that the LEP area should explore the potential for the establishment of a regional business bank to meet the needs of local companies.

Jeremy Middleton, chair of the LEP’s investment panel, is a strong advocate for a North East based bank.

He said: “Access to finance across the North East LEP area is seen as a barrier to growth by many businesses. We want to encourage expansion of growing companies. A regional bank would understand the needs of the region and be able to react effectively, unblocking financial bottlenecks that frustrate business owners.

“I’m delighted that Anthony Thomson and Greg Clark – both originally from the North East – are actively involved in debating this important topic. Regional banking is identified as a recommendation by the Adonis review to help local businesses large and small access finance efficiently.”

The event is free and will take place from 10.30am-2.30pm including a buffet lunch at the Baltic Centre, Gateshead on Friday 7 June. Anyone interested in attending should e-mail Jacqueline Wills via jw@thefsforum.co.uk. Places are limited and will be allocated on a first come, first served basis.

Further information from Christine Holland, Holland PR & Marketing Ltd Tel 01670 790246 or 07711 698246. Email: christine@hollandpr.com

Home / Funding / Page 17

£30M added to North East LEP’s investment fund

The North East LEP has added another £30 million to its investment fund thanks to a successful application to the third round of the Regional Growth Fund.

Now worth over £55m, with the initial £25m made available from the Growing Places Fund, the North East Investment Fund is available to projects of all kinds that create jobs and growth in the North East LEP area, in particular large scale housing, commercial and industrial property, and infrastructure investment.

As an evergreen fund that aims to recycle money through as many projects as possible, the fund is primarily aimed at schemes that lack the necessary finance to get started and can repay the investment of public money. However, each project is assessed on its own merits and the North East LEP’s Investment Panel will make loan or equity investments driven by the particular circumstances of the investment and its strategic importance.

On Enterprise Zone sites the investment fund is available to finance all stages of projects with repayment to the fund possible from retained business rates. For some strategic and critically important transport projects where no return is possible the panel will look at different funding approaches.

By targeting those projects with the greatest economic returns, the North East Investment Fund aims to create at least 2,300 new jobs over 10 years across CountyDurham, Northumberland and Tyne and Wear.

In bringing together the RGF allocation and Growing Places Funds to create one Investment Fund the North East LEP is creating a pot of capital with the scale needed to take risks and invest in projects that are beyond the current limits of bank finance.

The duration of the loans made to date vary from two years to 20 years. Interest rates reflect the need to live within EU rules on State Aid, but vary from 1.95% to over 11% depending on the risk involved in the project.

The application process is simple and there is the opportunity to present any projects to the investment panel which includes LEP Board members Jeremy Middleton, Michael Bellamy and Paul Varley. They are supported by Craig Iley of Santander, Kevan Carrick of JK Property Consultants, Andrew Mitchell of North East Finance and Phil Barnes. These local experts in property, development and finance offer their time and expertise on a voluntary basis. The group is completed by a representative from the economic directors of the seven local authorities – currently Sheila Johnston of Gateshead Council.

The investment panel has been considering project applications for 12 months. Of the £20m of loans already made, Newcastle’s Stephenson Quarter was one of the first projects to be allocated money, but there are also projects in Washington, central Sunderland, South Shields, Chester-le-Street and on the banks of the Tyne in North Tyneside that are now going ahead thanks to North East LEP finance.

Paul Woolston said: “The flexibility of the North East Investment Fund means that it can fund a wide range of projects where the private sector is not stepping in at all, or provide the vital element in a package of support.

“With Stephenson Quarter, the LEP investment fund’s £1.7m was the pivotal final piece in the funding jigsaw to enable this major city centre development to go ahead. With TealFarmBusinessPark in Washington, the fund came in right at the beginning of the project to drive it forward to completion in partnership with the developer.”

The North East Investment Fund is open all year round and the panel meets on the following dates this year to consider projects: 10 June, 29 July, 4 September, 4 October, 1 November and 29 November.

Jeremy Middleton of the LEP’s investment panel said: “South Tyneside’s underwriting of the project on South Shields Riverside, which was awarded £2m of loan funding from the fund, is an example of a project that is putting the money to work and keeping the fund revolving. That in turn creates new opportunities for more local projects including those that need a longer term vision.

“We are seeking more projects right now to get this new finance out, and keep as much of the fund at work as possible. At £55m the fund cannot replace banks or other sources of finance but we can take a different look at risk and the cost of a loan from us will normally be commercially attractive. I hope that any bank or developer looking to get a project underway but needing to share risk with us will come forward right now so that the North East is well prepared to take advantage of growth as it materialises.”

Paul Woolston added: “The North East Investment Fund will shape future investment in the region’s key sectors, helping us to grow our international presence in offshore, automotive, digital, professional and business areas.

“Public and private sectors will benefit from the wide-ranging remit of this fund. It will help to drive the economy not only of this area, but of the UK. We now have a fund in the North East that will keep more of the proceeds from our growth in the region. I’m delighted that through strong joint working the North East LEP will be supporting even more investment to boost jobs and growth.”

Applications to the investment fund are made through the LEP. Guidance, examples and all the paperwork can be found at /ne-investment-fund/ and by contacting Matthew Ebbatson or Helen Golightly at the LEP (matthew.ebbatson@nelep.co.uk or helen.golightly@nelep.co.uk) who will be happy to talk about the process and provide whatever help is necessary.

Further information from Christine Holland, Holland PR & Marketing Ltd. Tel 01670 790246 or 07711 698246.