29/10/2014

North East Expansion for Pioneering Catalyst Fund

A unique fund that helps Tees Valley companies bid for contracts, which create and sustain jobs in the area, is being expanded to outside the Tees Valley.

The £10 million fund, the first of its kind in the UK, was launched in Tees Valley to provide security for performance bond guarantees, which offer a financial guarantee to a contractor that a supplier will deliver on time and to standard.

Backed by the Regional Growth Fund, the Tees Valley Unlimited (TVU) initiative gave Tees Valley companies the ability to bid for large commercial contracts, opening up new markets and opportunities and helping to further strengthen the local economy.

Following its success, TVU, the Local Enterprise Partnership for Tees Valley, is extending the fund so it is accessible to firms across the whole of the North East.

Performance bonds can cover a number of sectors, although generally cover high value products and are common in the oil and gas, construction, advanced engineering and offshore wind sectors.

Stephen Catchpole, TVU Managing Director, said: “The fund has proved to be an effective and efficient catalyst to Tees Valley companies wanting to bid for contracts.

“It has caught the attention and imagination of businesses outside Tees Valley and now the scheme’s geographical footprint is being extended outside the area.”

TVU established the innovative fund after pinpointing that a lack of help to provide bonds was a barrier to growth for many companies in the area.

The regional version will be managed by FW Capital, which has been administering the Tees Valley scheme since its launch.

One company to recently benefit is award-winning engineering company Wilton Engineering Services Ltd, of Port Clarence, Stockton, which recently completed a £33 million project for the world’s largest independent oil and gas exploration and production company, ConocoPhillips.

It has secured a £1.2 million loan from the Fund to finance the project’s warranty bond with Lloyds Bank.

Established in 1994, Wilton is a specialist provider of services including design and consultancy, fabrication, coatings and site services to the offshore and marine industry.

Managing Director, Bill Scott, who was named North East Business Executive of the Year in 2011 and the Entrepreneurs’ Forum Entrepreneur of the Year in 2012, believes the funding will improve the company’s ability to tender for contracts in the future.

He said: “Wilton Engineering Services has a long and established reputation in the Tees Valley onshore and offshore energy sector. We’re proud to have been providing specialist high-quality services to numerous key Tees Valley industries for more than 20 years.

“With the Tees Valley Catalyst Fund backing we’ve been able to move away from using our working capital to cover warranty bonds and have been able to invest in the business to improve our facilities and resourcing. We’re now well-placed to bid for more contracts in future.”

Wilton has completed structures weighing up to 12,000 tonnes on site and undertaken work including sub-sea structures, pipeline clamps and platform and subsea protection structures.

Stephen Catchpole added: “Wilton Engineering Services is a company that Tees Valley truly can be proud of with a track record of making its mark at home and abroad.

“The award to Wilton Engineering Services demonstrates how Tees Valley Catalyst Fund unlocks business opportunities and enhances companies’ capacity to deliver growth.”

Nicky Atkinson, Investment Executive at FW Capital, said: “Wilton Engineering Services is a well-known and respected name in the North East’s oil and gas industry with an experienced management team and strong strategic vision.

“FW Capital is pleased to have worked with Bill and his team, as well as Lloyds Bank, to structure a loan that provided the financial backing to meet the warranty bond requirements of this high profile project with ConocoPhillips.

“Now the fund it being extended across a wider area, it will be able to help ambitious North East businesses take advantage of opportunities for growth and to access new markets.”

Alison Smith, Relationship Director at Lloyds Bank Commercial Banking in the North East, said: “We have seen Wilton Engineering Services go from strength to strength in recent years as it capitalises on increasing demand for specialist engineering expertise. We look forward to continuing our support for such an ambitious business, alongside FW Capital and The Tees Valley Catalyst Fund, as it targets further expansion.”

Launched in 2013, the Tees Valley Catalyst Fund, helps businesses bid for new contracts by providing short-term finance from £100,000 to £2 million to fund short-term advance payment guarantees, performance and warranty bonds as well as to extend existing bond facilities. Finance is typically available for up to 24 months.

The fund is expected to unlock almost £700 million of additional work and support approximately 1,440 jobs in Tees Valley during the next ten years.

It is an ‘evergreen’ fund with interest and repayments on loans being ploughed back and recycled into new lending.

 

Tees Valley Catalyst Fund