NORTH’S BUSINESSES BENEFIT FROM EQUITY FINANCE

By published 14 February, 2014 No Comments

One of the UK’s longest-established business support organisations, operating in three areas of the Northern region, has added its voice to the CBI’s call for more companies to consider equity finance when looking for investment.

An equity finance package from UK Steel Enterprise helped chemical processing company Exwold Technology invest £1m in new technology. (From left) Managing Director Kevin Martin, Simon Hamilton of UK Steel Enterprise and Director James Robson.

An equity finance package from UK Steel Enterprise helped chemical processing company Exwold Technology invest £1m in new technology. (From left) Managing Director Kevin Martin, Simon Hamilton of UK Steel Enterprise and Director James Robson.

UK Steel Enterprise Ltd, set up in 1975 and now a subsidiary of Tata Steel, says that equity finance can be a winner for businesses of all sizes and that its own research shows equity-backed businesses grow faster than those backed solely by loan funding.

UKSE’s Northern regional office covers the steel areas of Tees Valley, Derwentside and West Cumbria and more than £17m has been invested to support 1,100 businesses in the region with tailored financial packages.  An additional £12m has gone into providing business premises and more than 16,000 jobs have been created.

The CBI report “Slice of the Pie” highlights the UK’s over-reliance on traditional debt finance, saying that greater use of equity finance could help more firms to invest, grow and boost the UK economy.

Simon Hamilton, Managing Director of UK Steel Enterprise, said: “The report highlights that although only 3% of growing firms use equity finance, two thirds of those who do use it report a positive experience.

“We echo that as we have found that equity finance can work really well for small and medium sized enterprises (SMEs) as well as larger companies. As a regeneration body, we aim to help businesses looking for relatively small amounts of investment and can provide share packages up to £750,000.”

Chemical processing company Exwold Technology Ltd benefitted from a small loan from UK Steel Enterprise in its earliest days followed four years ago by £250,000 in an equity finance package that was part of a £1m investment into new roll compaction technology and stock control system.

Now operating from three sites in Hartlepool and Billingham with a turnover approaching £5m and 60 employees, around 70% of its business is export and customers include multi-national companies in numerous sectors including agrichemical and petrochemical.

“”Equity finance was the ideal route for us,” said Managing Director Kevin Martin. “We feel that we have benefitted not only from having no loan repayments but also from our long-term partnership with UKSE.  It is a source of valuable advice and support and also demonstrates to others that UKSE has confidence in the company.”

“It is one of the key advantages in taking equity funding that all the cash stays in the business rather than having to be used for loan repayments,” said UKSE’s Simon Hamilton.  “Other benefits for SMEs include a strengthened balance sheet and the possibility of further expansion finance from a source with a real vested interest in the business.

“It is also a myth that using equity finance results in a loss of control.  UKSE is not here to run businesses and we never take a controlling interest but we are a source of support and advice that our companies say is a real benefit.

“We would encourage companies to talk to their business advisers about equity finance as many growth projects stall when more traditional funding routes are exhausted. Equity funding can, quite simply, help a business do what it wants even if loan funding is not available. Our aim is always to tailor a financial package that is right for the individual company,” he added.

For details of UK Steel Enterprise’s support for businesses call 01642 777 777 or see www.uksteelenterprise.co.uk

Tags: Business
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