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FW Capital ‘actively investing in established SMEs in the North East’

With October’s Agents’ summary of business conditions from the Bank of England reporting that ‘fear of re-pricing or withdrawal of existing facilities continued to discourage many small businesses from approaching lenders altogether’, FW Capital’s investment director, Peter Wright assesses the current availability of business finance for small and medium-sized businesses or SMEs and the outlook for 2012 - 13.

“Small and medium-sized businesses still have a tough job on their hands securing finance and deals are taking a long time to complete when they do.  I see limited signs of encouragement for 2012 -13,” comments Wright.

“Despite all the talk, what’s on offer from the banks and through asset-based lending is limited.  Private equity and venture capital houses are active, but selectively so in terms of the deals they’re completing. 

"The Business Growth Fund may prove to be a useful addition at the larger corporate end of the market, but with a turnover threshold of £10m, many smaller businesses may not find it easy to get onto the BGF’s radar.”

“Business angels are moving away from technology investments to more mainstream investments and turnarounds. Many are also keen to be involved in syndicated deals, but this is all about individual chemistry and cultural fit,” Wright continues.

For Wright, despite their relatively limited ‘firepower’ and sector restrictions, the regional public/private funds are one of the few real sources of new term lending and equity investment currently available for SMEs.

“FW Capital is actively investing the North East Growth Plus Fund in established SMEs in the North East and we’re keen to talk to even more. In fact, FW Capital’s parent company, the Finance Wales Group invested over £40 million in 2010 -11.  Times are tough, but we have capital to invest.  We also understand SMEs’ needs and can adopt a flexible approach to structure investments that really suit their plans.”

With a ‘bumpy ride’ and few encouraging signs in prospect for 2012 – 13, Wright doesn’t anticipate any imminent interest rate rises.

“Business finance is still available from investors like FW Capital for the right business plans. 2013 -14 will be much more positive, so I’d urge businesses to hold on tight in 2012 – 13,” he concludes.

FW Capital’s investment director, Peter Wright was speaking at the recent senior finance dinner hosted by FW Capital and Hays in Newcastle.