INVESTMENTS made by the North East's taxpayer-supported venture capital funds are set garner riches in excess of £150m to support businesses in the region for generations, it has emerged.
Much has been already made of the benefits which the £125m Finance for Business North East Fund (formerly JEREMIE) will bring to the region’s businesses.
The fund, which was launched in January, is expected to create 5,000 jobs and support 850 companies over its five-year lifetime.
But it has now emerged that the legacy generated from the investments made with the Finance for North East Business Fund money is expected to total over £100m.
And the North East’s existing publicly private equity funds, which have been in operation for over five years, are expected to have created a £50m legacy pot by 2013.
Andrew Mitchell, chief executive of North East Finance which will oversee the day-to-day running of the Finance for Business North East Fund, said: “The £150m funding legacy which will be created by the on-going investments will last for generations.
“It is a source of money that will be available for the region’s business up to 2025 and beyond.
“This is going to be vitally important to the region as it comes at a time of public sector cutbacks.
“National government will never return to the stage in the way it has done in recent years. There will just not be the money to do venture capital schemes like the ones we have seen.
“What we have created here will set the North East apart from anywhere else in England.”
A new organisation, North East Access to Finance, (NEA2F) has been established by One North East to look after the legacy pots.
NEA2F is chaired by Hugh Morgan Williams, chairman of the Washington-based Canford group, who has been involved in access to finance initiatives in the North East for 15 years.
Also on the board are Graham Thrower, One North East board member, formerly with Citigroup; Geoff Hodgson, a well known businessman with wide interests in the tourism and hospitality sectors; and Mark Chidley, senior banking partner with law firm DLA Piper.
Mr Morgan Williams said: “Together we are committed to ensuring that SMEs in the region get the help they need to secure the funding they require, and overcome one of the main obstacles to growth in the region.
“We believe the economic prospects for the North East have been significantly enhanced by the creation of this investment initiative. It is our job to ensure that this ambition is delivered.”
The £125m Finance for Business North East Fund is being supported with £44.25m from the European Regional Development Fund 2007-2013 and £18.25m from One North East.
The European Investment Bank is committing £62.5m into the fund which will be lent at a commercial rate.
Over the last decade over £30m of taxpayers money, provided by One North East, has been invested in North East business through the private equity funds such as Newcastle based NorthStar Equity Investors and NEL fund mangers.
The money from these two sources of funding, which is anticipated to be in the region of £150m, will support North East businesses from 2013, when the Finance for Business North East Fund scheme comes to an end.