Private equity firm Foresight Group has revealed plans to open a Newcastle office ahead of efforts to expand its portfolio of investments in the region.
The listed investment manager has chosen offices on Newcastle's Grey Street for a base from which it will target established small firms that require debt and equity funding, typically up to £5m. Foresight boasts a near £60m North East Fund, the first part of which launched last year and has so far seen two deals constituting about £5.5m.
Now, a £20m injection from British Business Investments - a subsidiary of the British Business Bank - completes the second close. The firm says it has a number of deals on the table and hopes to be making announcements about further investments in the near future.
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The North East Fund is targeted at businesses with headquarters, or significant operations in County Durham, Northumberland, Tyne and Wear, Teesside and also North Yorkshire, West Yorkshire, East Riding of Yorkshire, North Lincolnshire and North Yorkshire. Foresight already runs a Leeds office which it opened in September last year - a move it said had proven the "boots on the ground" value in running regional bases.
Matt Smith, partner at Foresight Group, told BusinessLive the firm had developed a successful model for running regional SME funds using local professionals supported by a national group to execute deals that have delivered strong returns. Asked about the opportunity in the North East, Mr Smith said it was more pressing now than ever, as a significant gap in the market had emerged for buyout and growth capital that is not constrained by state aid legislation.
He added: "Small funds are quite hard to raise because big pension funds want to allocate big amounts of capital which mean big deals, which then means national. So if you want to raise smaller funds targeted at smaller deals - in our view you can't do smaller deals nationally because you don't have the local networks."
Judith Hartley, CEO at British Business Investments, said: "British Business Investments is committed to improving choice and diversity of funding options for UK smaller businesses seeking to grow. By investing in funds like Foresight’s North East Fund, we help smaller businesses across the UK to access capital and unlock rapid growth. Following our previous commitment to Foresight’s Scotland Fund, we are delighted to work with Foresight again to support smaller businesses across the North East."
Cllr Richard Bell, deputy leader and Cabinet member for finance at Durham County Council, added: "We are pleased the Fund has achieved additional financial backing. This will mean more of the region’s diverse range of businesses will be supported, in turn creating more jobs and securing further investment. It will support our commitment to ensuring the growth of our businesses, solidifying the North East as an attractive location for all, from small-scale family firms to international investors."
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