Competitive Regions – shaping best practice

Sheffield, 9 October 2003

Presentation on Support to SMEs

Background

• Launched in 1996 as a unique £25m fund

• Private sector/public sector partnership

• Central to Objective One Programme• Proven Demand for gap finance in the

SME marketplace

Structure

Company Limited by Guarantee Stakeholders -

Bank of England, Chamber Of Commerce, MSIF Partners

Private Sector investors plus ERDF MSIF Board of Directors (non-

executive) Fund Management (executive)

MSIF’s Role on Merseyside

To help businesses get started or expand

Improve the Merseyside economy

Create and save jobs

Track Record – Objective One Programme 1993-99

• £32m successfully invested• 600 businesses backed• 5000 jobs created or saved• £88m private sector money

levered in• MSIF model replicated in South

Yorkshire, Wales and Cornwall

ERDF £ 36m Barclays Bank £ 22m Merseyside Pension Fund £ 22m

Objective One Programme 2000-2006

An £80m fund

£80m for Merseyside Businesses

Targets

Support 1,000 businesses Create 7,500 jobs• Preserve 5,200 jobs £150m private sector leverage Make commercial returns to ensure

sustainability

Types of Support Available

Loans Loans with an equity-based premium Venture Capital Management SupportNO GRANTS Up to 50% of the total amount needed

What we look for

Strong, balanced management team Commercial Viability Committed, capable and focused

leadership Quality Business Plan Great ideas, innovation, unique

product or service, proven demand

Situations in which we Operate

Start-ups Businesses needing

working/development capital Rescue – out of receivership MBOs, MBIs Syndicated deals

Small Firms Fund£20M

Loans £3k to £100k Fixed interest rates Interest Rebate –

one third Business support

post investment Sole traders,

partnerships, limited companies

Mezzanine Fund£20M

Loans £100k to £1m Floating interest

rate 33% interest rebate Exit premium Support via

Non-Exec Directors Limited companies

only

Venture Fund£40M

Equity up to £2m Business support

post investment Limited Companies

only

Why the model has worked

Established market need – products tailored to those needs

Partnerships/Relationships/Profile

Management Support

Terms of deal balance business needs with commerciality

Fund Management

• Alliance Fund Managers - newly established fund management company

• £123 million under management – now one of UK’s largest regional fund managers

• Culture and approach

THE VISION

A lasting institution to serve SMEs Plugging a growing “funding gap” Working with local partners Targets in the perceived growth

sectors Continued value for money within

Objective One Programme

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