In the past few days, a trio of UK local authority pension funds have announced new investments to boost local businesses.
The Teesside Flexible Investment Fund (TFIF), a £20m (€24m) fund launched last year with investment from Teesside Pension Fund – which provides pensions for local government employees in north-east England – has completed its first investment.
TFIF has made a seven-figure loan to the Paralloy Group, a stainless steel alloy specialist and manufacturer based in Billingham, to help the company achieve its next stage of growth, generate new jobs locally, and meet increased demands from industrial markets and advances in new technologies.
Managed by FW Capital, a firm specialising in finance for small and medium-sized enterprises (SMEs), TFIF provides a mix of property development funding, contract-related bond finance and finance to support management teams in buying a business in the local area.
Meanwhile, the Avon Pension Fund has invested £50m into the South West Fund from private equity and infrastructure investment manager the Foresight Group, in the fund’s second close. Devon Pension Fund provided the £50m cornerstone investment at first close when the fund launched last year.
The investment fund will target smaller equity investments in established, promising companies with growth potential across South West England, from Cornwall to Oxfordshire. It will invest in a broad range of sectors, in various transaction types, including growth capital, buyouts and equity release.
The fund is designed to be evergreen, providing a permanent pool of capital around which SMEs can make long-term plans.
Councillor Paul Crossley, chair of the Avon Pension Fund committee, said: “There is a demand for funding for small and medium-sized companies, and investment is crucial to ensure local businesses can reach their full potential. This commitment is Avon Pension Fund’s latest local impact initiative, following our recent successful investments into renewable energy and affordable housing in the South West. We believe this fund will support the creation of high-quality, local jobs and positively impact the local economy.”
Additionally, FW Capital and Foresight have been appointed by the South Yorkshire Pensions Authority to manage two new funds supporting SMEs across the region, after the pension fund identified funding gaps that are hindering growth.
Each fund will deliver a £20m commitment of finance to enable growing businesses to scale up and innovate.
The South Yorkshire Debt Fund, managed by FW Capital, will provide loans of up to £2m to be used for boosting working capital, purchasing equipment, recruitment, marketing and product development.
The South Yorkshire Growth Equity Fund, managed by Foresight, will provide equity investments of up to £2m, typically as part of larger funding rounds of up to £15m, through co-investing alongside Foresight’s other funds.
These appointments, however small, show there has been a shift in local authority pension funds supporting the UK government’s growth agenda, which pushes for local investment, potentially boosting the nation’s economic growth.
Read the digital edition of IPE’s latest magazine
No comments yet