Bernstein calls on NW Fund to speed up
Regional leaders of the £520m European Regional Development Fund programme in the North West are meeting with venture capital managers of the North West Fund on Friday to discuss ways of accelerating the investment process after concerns over slow spending.
There is £100m left of the current ERDF programme which expires at the end of 2013. Among the areas the ERDF NW Local Monitoring Committee is keen to accelerate is the enterprise investments made through the NW Fund.
In a board paper published by the Greater Manchester Local Enterprise Partnership on European regional policy, directors of Manchester's policy think-tank New Economy state that a "number of recommendations for change" have been drawn up with the venture fund managers.
The LEP paper continues that "an in-depth session to explore issues with the NW Fund and regional partners" has been scheduled.
ERDF is managed by the Department for Communities & Local Government. The North West European Strategy Group which reports to DCLG is chaired by Sir Howard Bernstein, chief executive of Manchester City Council. Bernstein is also deputy chairman of the separate ERDF North West Local Monitoring Committee, a scrutiny group chaired by Philip Cox, director of local economies, regeneration and European programmes at DCLG in London.
A spokesman for DCLG said fund managers at the £185m NW Fund, which is designed to last beyond the 2013 expiry of the ERDF programme, will present to a special ERDF North West Local Monitoring Committee meeting on Friday. The monitors will hope to agree specific procedural changes to speed up investments.
The NW Fund provides debt and equity finance from £50,000 to £2m to small and medium-sized businesses based in or relocating to the region in key growth sectors.
A spokesman for the NW Fund said: "With the slowdown in the economy, it is taking longer to complete deals across the market. To ensure that funds generate the necessary returns, all investors must continually adapt their investment strategy to fit the environment in which they are operating. There is obviously a greater risk in investing in a business now, compared to before the start of the financial crisis, and so extra attention needs to be paid in scrutinising deals."
Andy Leach, chief executive of North West Business Finance, manager of the NW Fund, added: "Given the nature of equity funding and the due diligence involved, deals take time to complete. However, we are about to celebrate our 100th investment after our strongest ever quarter in Q1 2012. With signs of Q2 being just as successful and with over £25m already invested since our launch, £18m of co-investment raised and further funding of £18m allocated to support our current investment portfolio, The North West Fund is gaining real momentum and we are on track to exceed our 2012 investment target of £32m.
"Like all organisations with public money, we are in regular contact with our stakeholders to review our offering and performance. Given that The North West Fund was conceived in a different economic climate than that prevailing today, it is important that we continue to evolve our approach and risk appetite to match prevailing circumstances – always with the objective of supporting viable business propositions with the potential to deliver commercial investment returns. This helps to ensure that the funds are best used to support North West businesses and job creation in the region."
It is not the first time Bernstein, who was appointed to the LMC a year ago after management of European programmes was handed from regional development agencies to DCLG, has raised concerns over the rate of spend by the venture fund. After his appointment, papers filed at DCLG show he has repeatedly called for tighter monitoring of and reporting by the NW Fund.