A ground-breaking investment fund was launched on 21 March 2023 to provide innovative businesses with equity of up to £1m, helping them to expand and grow the region’s industries of the future.
The West Midlands Co-Investment Fund, totalling £25m, has been set up by the West Midlands Combined Authority (WMCA) in partnership with West Midlands Pension Fund to support small and medium sized enterprises (SMEs).
Investments will be focussed on SMEs that offer high-growth potential and the ability to help supercharge the regional economy.
The investment partnership will look to invest in SMEs across a variety of sectors including green technology, advanced manufacturing, life sciences and creative and digital, helping them to scale up operations.
The WMCA is putting £12.5m into the fund and this is being matched by West Midlands Pension Fund. It will be managed by Midven, part of Future Planet Capital, through an investment team.
Operating over a 10-year period, the fund will focus on bringing new private investor money to the region and, using a co-investment model, will invest alongside business angels and other private sector investors on a minimum £1 to £1 basis.
Andy Street, Mayor of the West Midlands and WMCA chair, said: “SMEs are the lifeblood of our local economy so it’s vital that we improve their access to the finance they need to advance. These are exactly the sort of businesses that will help power our regional recovery and future prospects.
“We were the fastest growing region outside London in the decade leading up to the pandemic and we remain a hotbed of some of best companies and brightest minds.
“That’s why, together with the West Midlands Pension Fund, we’ve launched the pioneering West Midlands Co-Investment Fund to back these very businesses. On a deal by deal basis the £25m will be matched by private investors to create a £50m plus capacity.
“We have a wonderfully rich entrepreneurial legacy here in the West Midlands and the WMCA is determined to play its part in continuing that distinguished legacy in the months and years ahead.”
West Midlands Pension Fund is one of the UK’s largest pension funds and it serves 800 employers who provide public services in the West Midlands and more than 340,000 active and retired individual members.
Cllr Milkinder Jaspal, chair of the WMPF Pensions Committee, said: “We’re delighted to support this innovative partnership. The West Midlands Co-Investment Fund will build on the collaboration across the West Midlands and apply globally recognised sustainable investment practices to deliver both commercial return and social benefits.
“It will enable businesses where our members work and live to maximise their potential alongside generating growth to meet future pension benefits. It will support the technological advances we need to transition to net zero and attract further investment into opportunities for driving positive change through innovation.
“As the first fund of its kind, it provides an example of the power of local partnership working together for businesses, jobs and our members across the region.”
The goals of the WM Co-investment fund are closely aligned to the region’s WMCA #WM2041 net zero ambitions and to its Plan for Growth which was launched last year to help supercharge the economy in the wake of the pandemic.
Cllr Ian Brookfield, leader of City of Wolverhampton Council and the WMCA portfolio holder for the economy, added: “SMEs account for 60 per cent of the private sector workforce and around 50 per cent of UK GDP. So, we need to do everything we can to ensure our growth SMEs are in good health.
“This West Midlands Co-investment fund will directly tackle growth challenges, working to connect SMEs with other organisations in their sector to add further value. It will also enable us to hear first-hand from SMEs and investors about where they need help and will provide a valuable opportunity to gain their feedback on what they would like to see enhanced.
“Supporting them to grow in this way can also help create a cluster effect in sectors such as life sciences and green technology which in turn will attract further investment into the region bringing with it the well-paid jobs of the future.”
The WMCA and West Midlands Pension Fund have set up the West Midlands Co-investment fund in recognition of the pivotal role that high growth potential SMEs have to play in accelerating the regional economy.
SMEs also create remarkably high value for the West Midlands, mainly in the form of jobs, technological development and in attracting investment from other regions or countries.
As a result, the fund could generate an extra £49m for the regional economy and create or secure nearly 800 jobs.