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New £150m fund to create up to 15,000 jobs in Wales

24/04/09

A new £150m fund which will support the expansion of more than 800 businesses and create up to 15,000 jobs across Wales will be launched today using £75m funding from the European Investment Bank under the EU’s JEREMIE (Joint European Resources for Micro to Medium Enterprises) initiative and a further £60m from the Welsh Assembly Government, via the European Regional Development Fund resources.

The funding – the first JEREMIE fund to be launched in the UK, will enable Finance Wales plc, a commercial funding provider to small and medium sized business in Wales, owned by the Welsh Assembly Government, to make debt and equity investments in growing businesses throughout Wales.

The fund is particularly important in the current economic climate in enabling the creation and expansion of small enterprises and encouraging regional economic growth.

Welcoming the new funding, First Minister Rhodri Morgan said: "This is a good day for our small and medium sized businesses, the backbone of the Welsh economy. The launch of this innovative new fund - a first in the UK - will be of tremendous value in helping Wales to ride out the recession and positioning companies to take full advantage of the economic upturn that will follow.

"This latest announcement again demonstrates how the Welsh Assembly Government is agile and innovative in devising new and practical ways to helping companies to surmount the current global economic and financial challenges, and grow for the future."

Deputy First Minister Ieuan Wyn Jones said: "This is a great achievement for Wales. In the One Wales programme of Government we pledged to use "all the tools available to us" to enable Welsh businesses to flourish and expand, including exploring options for seeking an agreement with the European Investment Bank. We have delivered on that promise and demonstrated our ambition for Wales and the Welsh economy.

"One advantage of this approach is that it will provide an investment legacy for Welsh businesses. Those using the scheme will pay off money borrowed as they grow, and the funding can then be reinvested – so the benefit will even outlast the current European Structural Funds programmes."

Simon Brooks, EIB Vice President responsible for lending activity in the UK, said: "The EIB Group is delighted to work with Finance Wales plc and the Welsh Assembly Government, as its parent body, in co-operation with the European Commission, to implement the JEREMIE scheme for the first time in the UK.”

He added: “This operation will provide additional strength to the EIB’s reinforced commitment to supporting SMEs during the financial crisis. I am convinced that our strong and successful relationship with Finance Wales will act as a catalyst to encourage further JEREMIE schemes in other UK regions."

Sian Lloyd Jones, CEO of Finance Wales plc, said: "The £150m fund will allow Finance Wales plc to continue to invest in growth businesses throughout Wales. Having already invested over £110m through more than 2,000 investments in Wales since 2001 and leveraged a further £322m of additional private sector investment, we can now build on our successful record.

"The new fund has been planned for some time but, in the current economic climate, it provides an even greater opportunity for Finance Wales plc to support growing businesses that might otherwise be struggling to secure funding.

"Co-investment will form an important part of our ongoing investment strategy and we will be working closely with banks and other funders, including business angels and venture capital funds, to enhance the array of commercial funding available to businesses."

Notes to editors

The JEREMIE initiative combines EIB finance with European Commission grants under the European Regional Development Fund to encourage effective investment in small and medium-sized businesses. Finance Wales plc will act as the holding fund for the EIB loan which it will on-lend to a specially created JEREMIE fund.

Under the JEREMIE initiative, this fund will then be supplemented by finance from the European Regional Development Fund, which is managed by the European Commission Directorate General for Regional Policy (DG Regio) and delivered in Wales by the Wales European Funding Office. The combined £150m fund in turn will provide capital to SMEs in the form of loans, mezzanine finance and equity investments.

EIB activity in Wales

From 2004 to 2008, the EIB has provided loans to projects in Wales amounting to a total of EUR 503 million in support of infrastructure and industry.

In 2008 the EIB lent over EUR 70 million for the refurbishment of social housing in the County Borough of Torfaen and a further GBP 100 million for a series of water supply and wastewater treatment schemes across Wales.

In the UK as a whole in 2008, the Bank lent some EUR 3.8 billion (GBP 3.6 billion) for projects, ranging from investment helping the UK's regions, to protecting the environment and improving national health facilities, transport, and supporting the activities of small and medium sized enterprises. Financing in the UK accounted for over 7 per cent of the EIB’s overall lending in the EU in 2008.

Structural Funds

The £3.6 billion EU Structural Funds programmes, delivered through the Welsh Assembly Government, are already helping 28,000 businesses and 250,000 individuals through employment and skills. To date, 74 projects have been approved representing a total investment of almost £1.3 billion (EU grant of over £625 million) across Wales. £514m (40%) is being invested in business, almost £619m (48%) in people and £144m (11%) for community regeneration, the environment and transport.

Finance Wales plc

Finance Wales plc provides commercial funding to small and medium-sized businesses throughout Wales, enabling them to realise their growth potential for innovation and growth. A subsidiary of the Welsh Assembly Government, Finance Wales manages funds of more than £130million; has invested more than £110million through more than 2000 investments into Wales-based businesses and leveraged an additional £322million private sector investment. www.financewales.co.uk