£5m funds from Invest NI 'reach seven firms'
Published 22/02/2013 | 04:20
A fund set up by Invest NI to lend £50m to small to medium-sized enterprises over five years has so far reached 20 deals with borrowers, it has emerged.
Fund managers said seven companies have received a total of £5m from the Growth Loan Fund (GLF), while a further two will draw funds today and another next week.
WhiteRock Capital Partners chief investment officer Paul Millar gave an update on the GLF's first six months as the partnership opened new offices in Belfast yesterday. Its funding – to be given out in loans of between £50,000 and £500,000 – is aimed at engineering, manufacturing and trading services firms tipped for growth and who have export potential.
The seven successful firms include coffee business Pure Roast Coffee, clothing firm Aria and Maydown Precision Engineering.
Mr Millar said the fundamental difference with a normal banking relationship was that the fund provided unsecured lending.
"Most of the companies are coming to us because they have no further security to pledge – for example, they might have a £1m facility that's already charged to the bank," he said.
Banks would refuse to lend to an eligible firm, not because its business was failing, but because they had no further security to offer, he said. Banks must also approve the new funding arrangement. Some measure of failure had been incorporated in its business model.
Mr Millar added: "We have some expectation of some level of default in an unsecured fund which is why the pricing is higher. If we do our jobs right, there's no burden on the taxpayer."
The running costs of the fund are £6.7m over the 10-year period. WhiteRock Capital Partners was set up by a consortium of Scottish fund managers Braveheart Ventures Limited, English fund managers NEL and Belfast-based Clarendon Fund Managers.
Invest NI is funding half of the £50m and private investor the Northern Ireland Local Government Officers' Superannuation Committee the other half.
Enterprise Minister Arlene Foster opened WhiteRock's new offices yesterday. She said: "The GLF is just one of the practical actions that my department, through Invest NI, has taken to stimulate and encourage growth." £500,000
The maximum amount that is offered to firms from the Growth Loan Fund