North East Growth Fund boasts $25m return

The Finance for Business North East Growth Fund, launched in 2010, has already secured a $25m return on its 146 investments.

The Finance for Business North East Growth Fund, a vehicle managed by NEL Fund Managers aimed at businesses in England’s north east, revealed on Monday it has secured a £20m ($25m) return on investment.

Launched in 2010, the Growth Fund is one of seven vehicles under the £159.5m Finance for Business North East program, backed by the UK government, the European Union and financial institution European Investment Bank.

The Growth Fund is a general investment fund, targeting development and growth-stage businesses. The fund was initially launched with the aim of generating 1,500 jobs and safeguarding an additional 1,300.

To date, the Growth Fund has made 146 investments, totalling £30m in commitments with an average deal size of £205,000. The fund is expected to last another three years, when its returns will be reinvested into regional firms.

A total of 29 portfolio companies have secured at least one follow-on round.

Yvonne Gale, chief executive at NEL, said: “Investment funds tend to work in two stages, with equal amounts of time being taken to both invest the available capital and then work with the portfolio of investee businesses to bring them to successful conclusions.

“Over the seven years that we’ve been investing the Growth Fund, we have never been short of strong business plans from ambitious North East business owners who have recognised the impact that outside capital could have on their ability to put development plans into action.

“To reach the £20m return on investment mark at this stage is extremely encouraging, and while mezzanine investment is never an exact science, our forecasts suggest that the companies in which we are still invested will maintain this trend for strong outcomes.

“Our Growth Fund investments are making a tangible positive impact right across the North East in terms of sustainable employment, supply chain spending and wealth creation, and in a challenging economic environment, it is one that is being felt by both individual firms and the wider North East economy over the long term.”

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