Bank invests £51m into Welsh SMEs
THe Development Bank of Wales invested £51m in loans and equity into SMEs in the first half of its current financial year.
The bank, which is wholly owned by the Welsh Government, said its investments into 220 firms between April and September attracted additional privatesector investment of nearly £38m – around two-thirds of which was leveraged from its equity investments made into early-stage tech firms. It said its investment activity helped to create or safeguard more than 1,370 jobs.
Wales experienced a 31% increase in the number of new business starts in Wales in the year to Q1 2021.
This is reflected in a significant increase in micro loans of up to £50,000 from the development bank provided to new businesses, which were up more than 60% compared to the same period last year. Some 66 new businesses have been supported with £1.5m to date compared to £900,000 in the same period last year.
The bank, wich can now invest up to £10m per deal, has also reported strong interest from businesses looking to secure equity investment. It invested £4.2m of direct investment into earlystage technology businesses during the period, which attracted £23.2m of private-sector investment – more than doubled compared to the same period last year.
Angels Invest Wales, the largest angel network in Wales, is also seeing increasing interest from businesses that are recognising the benefits of securing capital and expertise through angel syndicates. The network facilitated £2.4m in angel investment compared to £700,000 in the same period last year.
Demand for funding from the property sector remains strong, with developers needing flexible funding to help manage supply chain issues resulting from the effects of Covid-19 and Brexit.
The half-year did, though, see its biggest equity loss with the collapse of Port Talbot-based battery technology firm
Oxis Energy, in which it had invested £3.25m in equity.
Chief executive of the Development Bank of Wales Giles Thorley said: “There can be no doubt that Welsh businesses are doing everything they can to rebuild and get back on track. It’s encouraging to see that the entrepreneurial spirit and determination to succeed is stronger than ever, with many people deciding to start a new venture. The increased equity co-investment activity from UKbased and international investors who are seeing real potential in the Welsh economy is particularly welcome.
“With the Welsh Government’s Net Zero Wales plan launched, it’s positive to see the increasing demand for funding from businesses looking to invest in sustainable projects and the development of innovative solutions that will help fight the battle with climate change. As a long-term generalist investor, our investment activity reaches across business stages, sizes and sectors. Market demand shapes our activity and it is our role to address gaps and continue providing the support and funding that is needed for Welsh businesses to succeed.”
Economy Minister Vaughan Gething said: “In line with our programme for government commitments, the Development Bank of Wales is playing a successful role in raising awareness of the opportunities presented to business by equity investments, and in developing the market for equity in Wales.
“Just this month I have written to the chair of the Development Bank setting out the policy priorities for this term of government. That remit underlines the important role the development bank has to play in supporting the economic resilience and recovery mission which I outlined last month, and sets a clear ambition for its role in helping businesses transition to net zero.”