SMEs in four UK regions set to receive Â£200m

19 November 2001

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Barclays Bank, the European Commission and various regional pension funds have committed Â£200m between them to four regional investment funds. The funds are set to benefit small- and medium-sized businesses in the four areas in the UK which have Objective One status â€“ meaning they are comparatively poorer than the rest of the UK, having a GDP 75% or less than the EU average â€“ Merseyside, Cornwall, South Yorkshire and South Wales. The four funds (Merseyside Special Investment Fund, Finance Cornwall, Finance Wales and South Yorkshire Investment Fund) are all modelled on the Merseyside Special Investment Fund (MSIF), which has been running since 1996 and has so far invested Â£31m in over 500 businesses. They will supply loan and equity finance to companies that would normally be unable to obtain all of their required finance from traditional sources, either because they are seen as being too high-risk, or because they have no security to offer. Over the next ten years the four funds aim to: create nearly 19,000 jobs; safeguard over 10,000 jobs; assist over 3,000 small- and medium-sized businesses and lever in over Â£286m of private sector investment. The funds will focus heavily on the provision of management expertise, as part of the funding package.

Barclays has invested Â£84m into the funds from its recently formed Urban and Regional Economic Development unit. German financial institution Kreditanstalt fur Wiederaufbau will be providing below-market funding lines to Barclays which will be translated into an upfront one-off cash payment to each of the funds of around 0.22%. Barclays has agreed, with Kfw that the use of the money shall be dedicated to the development of the â€˜Money with Managementâ€™ programme. The European Commission is investing over Â£92m and the remaining Â£24m is coming from regional pension funds in Cornwall, Merseyside and South Yorkshire. MSIF will receive Â£80m; Finance Cornwall will receive Â£20m; Finance Wales will receive Â£46m and South Yorkshire Investment Fund will receive Â£58.5m (which includes Â£4m from the government). The funding was advised and assisted by the law firm Davies Wallis Foyser and Ernst & Young. For further information please contact Geraldine Turner (+44 151 236 4040 or geraldine.turner@msif.co.uk).