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Funding Success: Innovative Support for SMEs in Merseyside

Discover how Merseyside Special Investment Fund (MSIF) transformed the business landscape through a £80m fund. Learn about the unique funding structure and the track record in job creation and economic growth. Explore the different types of support available, from loans to venture capital, with a focus on strong management teams and commercial viability. Find out why the model has succeeded and how fund management by Alliance Fund Managers ensures continued success for SMEs in Merseyside.

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Funding Success: Innovative Support for SMEs in Merseyside

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  1. Competitive Regions – shaping best practice Sheffield, 9 October 2003 Presentation on Support to SMEs

  2. Background • Launched in 1996 as a unique £25m fund • Private sector/public sector partnership • Central to Objective One Programme • Proven Demand for gap finance in the SME marketplace

  3. Structure • Company Limited by Guarantee • Stakeholders -Bank of England, Chamber Of Commerce, MSIF Partners • Private Sector investors plus ERDF • MSIF Board of Directors (non-executive) • Fund Management (executive)

  4. MSIF’s Role on Merseyside • To help businesses get started or expand • Improve the Merseyside economy • Create and save jobs

  5. Track Record – Objective One Programme 1993-99 • £32m successfully invested • 600 businesses backed • 5000 jobs created or saved • £88m private sector money levered in • MSIF model replicated in South Yorkshire, Wales and Cornwall

  6. £80m for Merseyside Businesses Objective One Programme 2000-2006An £80m fund • ERDF £ 36m • Barclays Bank £ 22m • Merseyside Pension Fund £ 22m

  7. Targets • Support 1,000 businesses • Create 7,500 jobs • Preserve 5,200 jobs • £150m private sector leverage • Make commercial returns to ensure sustainability

  8. Types of Support Available • Loans • Loans with an equity-based premium • Venture Capital • Management Support NO GRANTS • Up to 50% of the total amount needed

  9. What we look for • Strong, balanced management team • Commercial Viability • Committed, capable and focused leadership • Quality Business Plan • Great ideas, innovation, unique product or service, proven demand

  10. Situations in which we Operate • Start-ups • Businesses needing working/development capital • Rescue – out of receivership • MBOs, MBIs • Syndicated deals

  11. Small Firms Fund£20M • Loans £3k to £100k • Fixed interest rates • Interest Rebate – one third • Business support post investment • Sole traders, partnerships, limited companies

  12. Mezzanine Fund£20M • Loans £100k to £1m • Floating interest rate • 33% interest rebate • Exit premium • Support via Non-Exec Directors • Limited companies only

  13. Venture Fund£40M • Equity up to £2m • Business support post investment • Limited Companies only

  14. Why the model has worked • Established market need – products tailored to those needs • Partnerships/Relationships/Profile • Management Support • Terms of deal balance business needs with commerciality

  15. Fund Management • Alliance Fund Managers - newly established fund management company • £123 million under management – now one of UK’s largest regional fund managers • Culture and approach

  16. THE VISION • A lasting institution to serve SMEs • Plugging a growing “funding gap” • Working with local partners • Targets in the perceived growth sectors • Continued value for money within Objective One Programme

  17. Questions and Answers

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