Business

Bank to launch new £70m fund for businesses in Northern Ireland after record year for equity investment

According to the British Business Bank, there have been 19 reported equity deals in Northern Ireland in the first six months of this year, with an investment value of £40.5 million - higher than the £22m invested in the first half of 2021
Gary McDonald

EQUITY investment in businesses in Northern Ireland hit record levels in 2021, rising by 44 per cent in deal numbers (up from 27 in 2020 to 39) with in value terms by 240 per cent.

It was the only devolved nation to experience an increase in the number of deals and was beaten in investment value only by the south west of England.

But while the equity picture remains positive, use of external finance reduced here, with smaller businesses continuing to favour core debt products - a trend which has continued into the first half of this year, according to the British Business Bank's annual nations and regions tracker.

And the Bank confirmed that it will continue to increase the supply and diversity of early-stage finance for smaller businesses here through the launch of a new £70 million Investment Fund for Northern Ireland next year.

Between 2017 and 2020 Northern Ireland's smaller businesses had the highest usage of external finance across the UK, peaking at 69 per cent and falling to 45 per cent last year to 36 per cent in the first half of this year.

And between January and June this year, the report outlines that there have been 19 reported equity deals in Northern Ireland, with an investment value of £40.5m - nearly double the £22m invested in the first half of 2021.

At a UK level, the tracker found that businesses in the most deprived areas are more open to using finance and report higher levels of ambition for growth, whilst facing greater challenges in accessing external finance.

Nearly half (49 per cent) of businesses in the most deprived areas have a long-term ambition to be a significantly larger business, compared to 40 per cent elsewhere. They are also more willing to use external finance to grow (36 per cent) than businesses in less deprived areas (33 per cent).

But the report found that the growth ambitions of smaller businesses in the UK's most deprived areas are being stifled because of a lack of access to finance. Just over 14 per cent of firms in Northern Ireland are based in the region's most deprived areas, making them more likely to face barriers to growth.

Susan Nightingale, UK network director (Northern Ireland) at British Business Bank said: “We are seeing promising signs in Northern Ireland's equity finance markets, whilst the marked decline in external finance usage brings to life the various economic challenges smaller businesses are facing.

“We know external finance is an important tool for smaller businesses to promote growth and stability. The Bank will continue to increase the supply and diversity of early-stage finance for NI smaller businesses, through the launch of a new £70m Investment Fund for Northern Ireland in 2023.”