Belfast Telegraph

Stormont could act as £4bn loan-arranger for business

Sammy Wilson eyes deal with equity fund to assist firms

By Liam Clarke

Finance Minister Sammy Wilson plans to make the Stormont administration a "lender of last resort" for promising local businesses refused loans by banks.

A £4bn private equity fund has said it is prepared to act as a partner if Stormont shares the risk.

The radical approach is one of the main ideas to emerge from the brain-storming session the minister held with business, trade union and community chiefs yesterday.

The meeting also heard proposals to approach Mervyn King, the governor of the Bank of England, to seek support for local banks who are prepared to lend in specific business sectors.

After the summit Mr Wilson told the Belfast Telegraph he was examining Canadian models of state investment in industry.

Later this month he will put proposals to the Executive for changes in the Programme for Government to reflect the idea.

"The budget is a dynamic thing, every minister should be monitoring that on a regular basis where new opportunities arise," he said.

Mr Wilson added: "We need to tap into every possible source for financing business expansion".

He described Northern Ireland's banking sector as "very vulnerable and not in a strong position to support industry or provide working capital".

The Finance Minister said he had been approached by a number of private equity funds who were prepared to invest in local business if the Government provided them with "guarantees or match finance" to sweeten the deal.

The Northern Ireland Local Government Officers' Superannuation Committee (NILGOSC), a pension fund for 90,067 council workers and other public sector employees, confirmed that it was already in talks with the Government but had not so far made a firm commitment.

Its deputy secretary, David Murphy, said: "Sammy Wilson and our chairman Trevor Salmon have met on this and we are arranging to meet again."

Invest Northern Ireland is working to identify suitable businesses.

Mr Murphy added: "We have to ensure that the figures stack up against other investment opportunities elsewhere."

NILGOSC serves employees in the Housing Executive, Translink and over 200 other public sector bodies, all of them in Northern Ireland.

The body has a massive fund of around £4bn to invest, but only about £2m of this goes into the local economy.

Mr Murphy said: "Up to now we haven't made significant returns from the local investment so getting a Government guarantee is important."

He said this could take the form of loans or matching investments from Government but, crucially, the fund would expect to make a return on its investment before the Government got its money back.

If the figures added up it would normally invest for about 10 years, which he said "gives a reasonable amount of time to see if the investment has legs or not".

The fund would also provide management expertise on the board of any company it took a stake in.

"That can be almost as important as the money," Mr Wilson believes.

Mr Murphy added: "Input from our managers could work particularly well with spin-outs from the universities which might have lots of technical expertise but not so much business experience."

The minister is enthusiastic about the idea, and says NILGOSC is not the only fund he has talked to.

However, with budgets already stretched by commitments to freeze university fees and not to charge water rates, he may find it hard to squeeze more money out of his Executive colleagues to support industry.

The DUP minister conceded that "the whole issue of revenue raising is going to be one which will trundle on through this administration".

Belfast Telegraph