South West equity finance markets grow at the fastest rate in the UK – British Business Bank
The South West equity finance markets grew in investment value more than any other region in the UK between 2020-21, according to figures released this morning (Wednesday) by the British Business Bank.
The bank’s second annual Nations and Regions Tracker suggests investment value was up 357 per cent to £820 million over 130 deals, with nearly £388 million of deals in the first half of this year.
The report says four in 10 businesses (41 per cent) were using external finance in the South West in the four quarters to Q2 2022, down four percent from the previous quarter, having been at 45 per cent) a year earlier. Core debt products remain the most used and widely available across UK nations and regions.
Steve Conibear, UK network director, South and West of England at the British Business Bank (pictured) said: “Smaller businesses in the South West showed a positive appetite for equity finance during 2021, with the highest increase in value of equity investment in the UK.
“It is also encouraging to see evidence of a number of future net zero clusters emerging in the region, which is already known as a hotbed of innovation and technology.
“External finance can be an important tool for smaller businesses to promote growth and stability as they navigate the current economic conditions. We will continue support smaller businesses in the South West through the launch of our new £200m South West Investment Fund next year.”
The report also identified a net zero innovation cluster in Bristol, with the potential for more to form in Swindon and Devon.
The Nations and Regions Tracker found that equity investment in net zero sectors has grown at an even faster rate than overall UK equity markets.
Since 2011, £6.9 billion of equity investment has gone into net zero-aligned UK smaller businesses across 1,307 deals. The share of deals which are in net zero sectors has grown every year since 2018 rising from five per cent in 2018 to 12 per cent in first half of 2022.
Net zero sectors are those that are likely to see growth related to the net zero transition and include: clean technology, hybrid and electric vehicles, biomass and biofuels, artificial meat and meat substitutes, and smart energy.
The growth in net zero-related equity investment has occurred across the UK’s nations and regions, with 69 per cent of deals and 67 per cent of investment taking place outside of London between 2011 and H1 2022.
These equity finance flows have the potential to spark clusters of net zero innovation, including in the South West. There were 20 net zero deals worth a total of £173 million in Bristol since 2011, representing 22 per cent of net zero deals in the UK and 66 per cent of investment in the South West.
A £200 million investment fund to support the growth of small and medium-sized businesses across the South West of England is on course to be launched in the first half of next year.
It aims to tackle an identified funding gap across the South West and increase the supply and diversity of early-stage finance for smaller businesses.
The South West Investment Fund is the first in a series of new Nations and Regions Investment Funds being launched by the British Business Bank which will deliver a £1.6 billion commitment of new funding to drive sustainable economic growth across the UK.