There was a surge in private equity investments in Liverpool city region and the North West during 2021, totalling almost £700m in the first three quarters of the year. Tony McDonough reports

New figures show that private equity investment into firms in Liverpool city region and the North West surged 275% to £692m in the first three quarters of 2021.

Published today, the British Business Bank’s eighth annual Small Business Finance Market 2021/22 report highlights a surge in equity investment in the region. There were 112 investments in Q1-Q3, up 33%, the report says.

Disparities remain between supply and demand in many regions, with the proportion of equity deals falling behind share of the smaller business population. In the North West, the region secured 6% of the deals in Q1-Q3 in 2021, despite 9% of the business population.

It reports that demand for finance in the North West remains robust, with 32% of smaller businesses surveyed stating they would be happy to use finance to grow. On the supply side, 2021 saw strong growth in the local venture capital sector. VC investors involved in the region grew from 27 in 2017 to 49 in 2021. 

Proximity between investors and small businesses was identified in the Bank’s first Regions and Nations Tracker report published in October 20201 as a key factor within equity investment.

Key investors in Liverpool city region include MSIF, which provides loans and investments for SMEs worth up to £2m, and Arete which was established in Liverpool city centre in late 2020 by a team of experienced investment specialists.

MSIF has invested in a range of businesses over the past two decades. Recent deals include arranging a £1m loan for supercar brake disc maker Surface Transforms. In the last few days Arete has invested £3.5m into renewable energy firm Dynamis.

Sophie Dale Black, UK network director for the north at the British Business Bank, said:  “The findings of this year’s report in the North West are really encouraging. Not only are we seeing the region’s resilience, but there is a clear appetite for growth as seen by the stellar increase in equity investment which is set to have seen a record year in 2021.

“There is work to be done, continuing to break down barriers to access to finance remains key to levelling up economic opportunity. Through our programmes, the British Business Bank will continue to support the country’s smaller businesses by improving access and options to secure external finance.”

In the October 2021 Spending Review, the Government announced a further £660m for a successor fund to the Northern Powerhouse Investment Fund (NPIF) delivered by the British Business Bank.

Since launching in 2017, NPIF has directly invested over £300m into 952 businesses across the North of England, alongside an additional £400m of private sector co-investment, taking its total delivery to more than £700m.

A further £150m for the Bank’s Regional Angels Programme was also announced at the Spending Review.  The programme has made commitments worth a combined £30m to North West based investors, Deepbridge Capital and Praetura Ventures within the last 12 months.