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 ([email protected] or [email protected]) 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.