A £130m fund specifically to back the growth of SMEs in Wales is expected to be announced by the Chancellor in his Budget tomorrow.
The fund, from the 海角视频 Government’s economic development bank the British Business Bank, will come as a welcomed development for Welsh firms looking for another source of growth-capital finance to support expansion and job creation plans.
The British Business Bank, which although it has a 海角视频-wide lending remit, including its successful Start-up Loans scheme, has until now not had a fund specifically for firms in Wales.
It has equity focused regional funds for the Midlands, the north of England and south-west England, as well as one for Northern Ireland.
Ahead of his Budget, Mr Sunak said: “Business over Wales have delivered for communities in incredibly difficult circumstances over the pandemic. As we look to the future we’re continuing to back small businesses in Wales to help them grow and succeed.”
It is not clear whether the fund for Wales will have ringfenced splits for debt and equity deals. Equity funds from the British Business Bank in England are managed by external fund managers.
The fund for Wales comes after the British Business Bank’s chief executive Catherine Lewis La Torre, who was born in the Rhondda, confirmed a specific fund for Wales was being looked at.
It came after research from the bank showed that while Wales has a 3% share of the 海角视频’s business population of high-growth firms and SMEs, in terms of the value of equity deals it secures just 0.9% of the 海角视频 level - despite having 4% in the actual number of deals. On debt and overdraft provision Welsh firms are slightly above its share of the 海角视频 population measure.
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The report, Regions and Nations Tracker: Small Business Finance Markets, 2021, found London, the south-east, the north-west and the east of England accounted for 86% of equity investment and 69% of private debt investment despite having just 55% of 海角视频 businesses.
The research also showed that fund managers were more likely to invest in firms close to where they are located.
Mr Sunak is also expected to announce a £150m fund for Scotland and £70m to build on existing programmes in Northern Ireland.
A £130m fund for Wales from the British Business Bank could see it co-investing in Welsh firms with the Development Bank of Wales, which on equity can invest up to £5m. The development bank is wholly-owned by the Welsh Government.
Enterprise academic Prof Dylan Jones-Evans, who has consistently called for a Welsh fund from the British Business Bank, said: "This is a hugely significant development in supporting ambitious growth companies in Wales.
"However, it is critical that those running the fund are able to bring new thinking into how Welsh firms are properly supported, especially as Wales has been underfunded for years in the venture space."