Why business is backing Brum and the Midlands
SHINY new offices to accommodate growing staff numbers for global blue-chips in Birmingham are one of many signs the region is thriving.
The area is booming on the back of such votes of confidence, combined with an impressive and fast-growing SME community.
The Midlands is fast becoming one of the country’s most sought-after places to live, work and play.
Just as London faced its largest exodus ever last year, Birmingham is enticing a large number of people, attracted to the region’s excellent transport links, as well as its job prospects.
In fact, it was recently ranked 49th out of 231 places to live in the world, according to Mercer’s Quality of Living Report, which takes into account transport, housing, schooling and the cultural scene.
Its business scene was just rated the best in Britain for SMEs, according to a survey by SumUp, which assessed the number and types of SMEs, density, property and forms of external support. Birmingham ranked 10th overall and first in the country, praised for its relatively inexpensive rent and high investment levels.
Transport links are good and set to improve with the HS2 route, which will make a trip to the Big Smoke just 45 minutes, with Manchester less than an hour away. Birmingham Airport is also being upgraded to accommodate an additional 5 million passengers per year.
As for employment, some large firms are making some pretty big statements: HSBC returned to its Midlands roots at the end of last year when it officially opened its new 210,000 square-foot Birmingham headquarters with 2,500 employees, 700 in new roles.
The new office is part of the bank’s £200 million investment in the region, with a total of 3,500 people working at HSBC’s different offices in the area. PwC employs 2,200 across the Midlands and this summer is relocating into larger offices in Birmingham.
The firm committed to the new space in 2016, and in addition to relocating its existing 1,400 regional staff, ensured it had room to accommodate a further 1,000 to cater for growing opportunity in the
region. All this is great news for ambitious, growing businesses as management teams and entrepreneurs have access to a fully-fledged, self-sufficient advisory network on the doorstep, comprising legal, banking, corporate finance and accounting advice as part of a burgeoning professional services sector locally.
SME’s are a real engine of growth in the region, supported by people’s increasing enthusiasm to locate in the area as well as a supportive backdrop for entrepreneurs.
Gymshark is a case in point : the Solihull-based gym wear business has grown exponentially since its 2012 launch, named the fastestgrowing business in the UK in 2016 and hitting the £100 million revenue mark in 2018. This astounding growth was largely achieved through influencers on social media.
The University of Birmingham makes a tremendous contribution to the Midlands through offering specialised support to fledgling businesses by way of incubatoresque support, doctoral expertise and recruitment assistance.
The university offers SMEs access to state-of-the-art equipment for businesses to conduct testing, with staff and researchers from the university on hand to help. The university’s BioHub offers a research lab specialised for biomedical technology development, while its Knowledge Transfer Partnerships bring qualified graduates together with suitable start-ups seeking recruits – a symbiotic endeavour for a period of six months to three years.
This month is the Midlands’ very own “Dragon’s Den” – Pitchfest 2019 allows SMEs to pitch to investors, enabling them a chance to boost their profile as well as gain feedback and even investment.
Beyond this seed capital, SMEs can look to further grow their company with the support of a private equity (PE) backer, which can bring both human and financial capital to the table.
There are currently over 90 different financial backers supporting around 170 businesses in the Midlands, according to a study on PE in the region by advisory firm BDO.
This number should grow as the region narrows the gap with London: the capital has 1 PE-backed business for every 1,761 firms, whereas the Midlands has 1 for every 3,570. The region’s industrial heritage means manufacturing is the most popular area for these backers, with 54 of the 170 deals in this space.
The Midlands area is stretching beyond its industrial roots and looking to the future however, increasingly embracing services and technology.
For example, the BDO report points out that biotech and healthcare accounted for the largest number of PE deals in the year of the study (2017).
Such backing can really help accelerate a company’s growth, whatever stage of development it is at.
The experience of Solihull-based UK Power Reserve (UKPR) is a case in point.
The power generation developer and operator was founded in 2010 and in 2015 partnered with PE firms Inflexion and Equistone to accelerate its growth.
During the investment period, headcount more than doubled to 150 as capacity trebled to over 500MW from 32 rapid-response power stations across England and Wales.
The business quadrupled its revenues from £20 million to over
£80 million in a short space of time, ultimately attracting Singaporean firm Sembcorp to acquire the company in 2018.
Businesses can also accelerate their international and digital growth through the right PE backer.
Coventry-based omni-channel retailer solutions provider PCMS, for example, took on PE funding in 2017 to access the finance and expertise needed to expand into South America and Asia, as well as enhance its software; the ongoing partnership with Inflexion also enabled the founder to retire after 32 years with the business.
Richard Swann is a member of the University of Birmingham’s Council, the university’s supreme governing body and a Partner at
Inflexion Private Equity
The Midlands area is stretching beyond its industrial roots and looking to the future, embracing services and technology