THE NORTH WEST FUND

LMC PRESENTATION

15TH OCTOBER 2012

MALCOLM EDGE INTERIM CHAIRMANRORY EARLEY BOARD MEMBER CLIFF MAYLOR CHIEF FINANCIAL OFFICER

THE NORTH WEST FUND

• A £170m fund to invest in small and medium-sized enterprises across the North West of England

• Funded by ERDF, European Investment Bank and BIS

• Created in 2010, and will continue to invest until December 2015

• Has six sub-funds; Venture Capital, Development Capital, Loan, Energy & Environmental, Biomedical and Digital & Creative

UPDATE ON SIGNIFICANT CHANGES

• Strong investment performance this year, with some recovery of 2011 shortfall, except in Dev Cap fund;

• YFM contract ended commercially, and process for appointment of new fund manager commenced

• Revised business strategy produced

• Chief Executive and Chairman have resigned; new interim Chairman appointed

• Recruitment of new CEO and Board members commenced

• Marketing review completed

2012 PERFORMANCE

• As at the end of September £24m invested this year against a target of £24m

• 75 companies have received funding this year - 128 in total

• 5 out of 6 fund managers exceeding investment targets for this year

• £35.6m in total invested to date, Of which £5.6m invested in follow on funding into 26 companies

• 338 jobs created, 494 jobs safeguarded and 24 businesses created

DEVELOPMENT CAPITAL FUND

• Dev Cap sub-fund performance behind profile by £8.8M at Q3• Due to reduced investment timescale, fund to be reduced to £30m, with

£25m for new investment• New fund structure to be operational no later than January

Need for the fund• Large number of NW businesses in eligible sectors• Average number of new applications to the fund 20-25 per month• Strong demand for loan type finance of between £250k-£500k• Need to support the more established businesses in the NW to stay

competitive• Fund still required to service EIB loan• Major contributor to output targets

• 127,300 SMEs in the North West operating in ERDF eligible sectors.

• Lack of finance available to SMEs – 33% of SMEs applying for loans from banks have been rejected

• Five of the funds expect to be fully committed significantly before end of 2015

Rationale for £155m fund

Investment Summary 2011 - 2015               2011 2012 2013 2014 2015    £000’s £000’s £000’s £000’s £000’s Total             

Initial Investment 10,460 23,606 25,967 25,509 12,740 98,282

             

Follow On 432 8,357 14,784 16,494 16,289 56,356

             Total 10,892 31,963 40,751 42,003 29,029 154,638

Outputs and results

Output targets

to end of Sept 12

*

Actual to end of

Sept 12

% achieved

J obs created 1400 427 31

J obs safeguarded 1400 563 40

Business Support (investments) 280 126 45

Private sector Leverage £m 29 23 80

Business Improving Performance (GVA) £m 175 TBC TBC

Businesses Created 70 36 51

Businesses with improved products, processes or services

280 126 45

Business Start up support 105 14 13

* output targets reflect revised outputs sent to PDT for approval as part of the wider NWOP output review. These are still to be agreed.

OUTPUTS ACHIEVED TO DATE

VALUE FOR MONEY

The qualitative and quantitative impacts of the fund are:-

•Growing reputation of the North West as a place to do business

•Providing SMEs with access finance

•Securing additional funding by attracting private funders.

•Supporting spin outs from university and encouraging entrepreneurial activity

•Development of North West Key sectors: Bio-Med, Digital & Creative, Energy and Environmental

•Creating a legacy fund for reinvestment post 2015

•Additional Business support offered

REVISED APPROACH

• Better stakeholder engagement

• Monthly 121 meetings with fund managers

• Strengthened board structure and governance

• Pro-active fund manager management

- Monthly 121 meetings with fund managers

- Closer working relationships

- Investment targets closely managed

- Forecasting more realistic

• Marketing approach to revised and recommendations from marketing review to be implemented. costs reduced at holding fund level. Fund managers to meet their marketing commitments

KEY MILESTONES

• Recruitment firm being appointed for CEO and Chairman appointments; appointments to be made by December, with significant stakeholder input

• Mini-competition proposals for reduced development capital fund due end of October, with appointment made by end of November

• 150th investment completed by December 2012

• Revised marketing strategy produced by December 2012

• £50m of investment completed by end of April 2013

Thank you