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16th July 2020

NPIF: Securing the North’s future economic prosperity amidst COVID-19

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Northern Powerhouse Investment Fund

Sean Hutchinson, Senior Investment Manager at the British Business Bank, discusses the recent sector trends for businesses in relation to various Government-backed schemes available, and what lies ahead for Northern markets.

Covid-19 has brought significant disruption to businesses across the country, with every sector facing unique and difficult challenges. There is no blanket solution to ensure the future economic prosperity of the nation. For the Northern Powerhouse Investment Fund (NPIF), it’s important that we ensure our vibrant business community in the North has access to the right kind of support for their company.

NPIF is already playing a central role in helping to meet this need. Committed to helping businesses through these challenging times, we are proud that we have continually been offering a range of financial support options and guidance to businesses, via our Fund Managers, throughout this pandemic.

Retail bounces back

When it comes to those which have been hit the hardest by the pandemic, it has undoubtedly been the businesses which have been forced to close by compulsory lockdown measures. For over four months, many businesses operating in retail, leisure and hospitality have been operating in a very limited capacity, if at all. Some are planning to start returning to a new normality, while others are still on pause waiting for further Government guidance. Accordingly, these sectors have benefited greatly from the Government’s Coronavirus Job Retention Scheme, providing financial respite by allowing employers to furlough staff.

Whilst enough for some, others have needed additional support to stay afloat. Most commonly for this sector, this has been in the form of immediate investment of cash via the Bounce Back Loan Scheme (BBLS), which provides loans up to £50,000. Not only is this being utilised to cover shortfalls in cash flow, but it has allowed many businesses to invest in essential equipment to ensure the safety of staff, such as personal protective equipment (PPE). The key advantage of these loans is that they can be paid back over a period of up to six years, with an interest rate of 2.5 per cent only beginning after the first year.

Diversifying manufacturing

Consumer-led businesses are not the only ones feeling the pressure of the pandemic. Since March, we have been working with a number of manufacturers to understand how NPIF can lend its support.

Throughout the duration of the pandemic, the industry has been tussling with new logistical challenges and disruption to supply chains, bringing about new cash flow challenges. As a result, many businesses in this sector have been taking advantage of the Government’s Coronavirus Business Interruption Scheme (CBILS), which offers financial support in the range of £50,001 to £5m. Not only does this allow these businesses to plug immediate cash flow gaps, but many of them are using these loans to diversify their service or adjust their business model, so that they can thrive in the long-term.

An example of a manufacturer that has utilised NPIF funding to solve such issues is NPIF – FW Capital-backed commercial furniture specialists Isomi. Based in Runcorn, Cheshire, investment has allowed the business to move to and fit out a new factory, that is now producing vital equipment which enables customers to make their premises more Covid-secure. Already, they are exporting products from their new ‘Wellness Screen’ collection – that includes freestanding screens, desk dividers and desktop screens – to the USA, with New York a sales hotspot. The manufacturer has also been receiving plenty of interest in the collection from both new and existing domestic customers, supporting UK workplaces in their quest to become Covid-secure.

Innovative investment

If we look at quickly evolving sectors such as advanced digital technology, life sciences and medical, many haven’t been hit as hard financially as leisure or retail. However, the sheer volume and demand for these services have put increased pressure on the sectors leaving many needing a helping hand to ease the pressure. Their success ensures that the UK, and indeed the North, is at the forefront of innovation; growing new industries to provide the jobs of the future.

To ensure momentum in these sectors is not lost, NPIF’s Equity Fund Managers have continued to invest in innovative businesses across the North. Crucially, NPIF investments can count as the match funding required by the  Future Fund, a programme designed to increase the flow of investments to early-stage equity supported businesses. The Future Fund can provide equity financial support in the range of £125,000 – £5m.

As a result, the North has received 11 per cent of the initial £236m released by the government to assist early stage technology companies. However, we expect this to increase significantly over the coming months, particularly as the NPIF Equity Fund Managers are able to put forward and complete on Future Fund deals for existing portfolio companies.

If anything, the COVID-19 crisis has emphasised the importance of the North to the UK’s economic recovery. The ‘levelling up’ agenda remains a key focus for the Government, and I’m incredibly proud of the important work being done by the British Business Bank and the Northern Powerhouse Investment Fund.  This activity continues to address imbalances of investment, providing businesses across various sectors with a tailored means of support – whether that is through BBLS, CBILS-backed facilities or Future Fund Investment.

If you are a business that is seeking support, please head to our website at www.npif.co.uk for more information on how we can help.

The Northern Powerhouse Investment Fund project is supported financially by the European Union using funding from the European Regional Development Fund (ERDF) as part of the European Structural and Investment Funds Growth Programme 2014-2020 and the European Investment Bank.

 

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