Business funder Merseyside Special Investment Fund reports full-year pre-tax losses of almost £2.5m but insists its SME investment portfolio remains ‘robust’. Tony McDonough reports
Merseyside Specialist Investment Fund (MSIF) is reporting pre-tax losses of almost £2.5m in the 12 months to March 31, 2023.
Based in Liverpool, MSIF provides loan and equity funding for SMEs across Liverpool city region and beyond. In September 2022 it rebranded its subsidiary fund management business as River Capital. The unit was formerly called Alliance Fund Managers.
In its latest accounts, filed on Companies House, MSIF reports revenues for the 12-month period of £2.36m. Its pre-tax losses totalled more than £2.47m compared to a pre-tax profit of more than £1.7m in the previous year.
In the annual report MSIF said: “In the year under review, the SME community has had to deal with the challenging economic environment.
“The global pandemic and geopolitical tensions in eastern Europe have impacted negatively on supply chains and, together with tight labour market conditions, have led to inflation rising to its highest level for over a decade.
“Despite the difficult economic environment, the group has continued to see the positive effects of the implementation of the growth strategies…. Overall performance has remained strong and on track.”
The accounts show the value of MSIF’s investments into SMEs fell by £1.85m. And it wrote off investments totalling more than £1.6m. It employed 24 people during the accounting period and net assets at March 31 stood at almost £40m.
In a statement to LBN, River Capital chief executive, Mark Borzomato, added: “Losses are reflective of the prudent policies adopted as part of the valuation of the group’s investments.
“In March 2023, these valuations also reflect the impact of the wider economic environment and cost of living crisis, the impact of the Ukraine conflict, and residual Brexit and COVID impacts as noted in the narrative.
“It is typical of the nature of such investments and portfolios that there is a degree of year on year volatility given the nature of a valuation exercise. But the portfolio remains robust and we believe will deliver long term value to the group, as it has done historically.
“In addition, as part of MSIF’s remit, sizable investment has been made to support the LCR ecosystem, including the ongoing development of the LCR Angel and LCR Finance Hub.
“This investment supports non revenue generating activity and has been funded from historic profits generated by the long term success of the group.”
In July 2023 John O’Brien left his role as MSIF chair, with immediate effect after six years in the role. Neil Ashbridge was appointed as interim chair.
MSIF was formed in 1995 and was backed with EU Objective One cash. It was tasked with offering funding to SMEs in Merseyside or attracting those from outside to relocate to the area. To date, it has backed around 12,000 businesses to the tune of £120m.
Its brief was to offer funding to ventures that might be seen as having too high a risk profile for traditional lenders such as banks. Thanks to the success of its investments it has now become self-sustaining.
During the financial year MSIF relocated to offices in the Plaza. It also launched Business Growth Loans to be delivered by River Capital. This provided £8m of investment funds with £6m ringfenced for Liverpool city region firms.
River Capital also launched Fund:AI which is dedicated to investing in ventures in the artificial intelligence field. Throughout the 12-month period MSIF supported a total of 23 SMEs, 19 from the Liverpool city region, with £4.7m of funding.
In June 2023 MSIF appointed experienced entrepreneur Katie Nicholson as director of the LCR Angel Network. Launched in 2018 to support early stage high growth businesses the network has received £500,000 in funding from MSIF.