The Clwyd Pension Fund has confirmed a £10 million equity investment in the £25 million Wales Management Succession Fund. This is the first time an institutional equity investor has backed a fund managed by the Development Bank of Wales or its predecessor Finance Wales.
The Wales Management Succession Fund was first launched in 2016 by Welsh Government with an initial £10 million investment alongside £5 million of legacy funding. The fund provides ambitious Welsh business owners and management teams with the funding they need to buy established Welsh small and medium-sized businesses (SMEs) when their current owners retire or sell. Equity investments of between £500,000 and £3 million are available.
£4.275 million has been invested to date with the Development Bank of Wales backing the successful management buy-outs of Glamorgan Telecom, First Choice Accident Repair Centre, ALS Managed Service (Holdings) Limited, Camtronics Vale and Minerva Laboratories (Coltrun Limited).
The £25 million fund will now support 20 businesses, leverage £15 million of private sector funding and create/safeguard 1000 jobs over the next five years.
Economy Minister Ken Skates said: “I am very pleased that Clwyd Pension Fund are investing alongside Welsh Government in the Wales Management Succession Fund. Attracting institutional investment at a fund level is a significant step forward in the evolution of the Development Bank of Wales, proving that Wales and Welsh business is an attractive proposition for investors.”
Colin Everett, Administrator of Clwyd Pension Fund said:
“As a forward thinking and responsible investor we actively seek opportunities which deliver on both fund performance and sustainability objectives. We are delighted to make this investment which will support economic growth and employment in a segment of the market vital for the health of the Welsh Economy. The investment also underpins the commitment of local authorities, as our principal fund employers, to supporting economic growth in Wales.”
Chief Executive of the Development Bank of Wales Giles Thorley and Group Investment Director Mike Owen presented an overview of the £10m investment into the Wales Management Succession Fund at Clwyd Pension Fund’s annual meeting with employers and member representatives in November 2018.
Mike Owen said:
“Management succession is a critical element of a vibrant and successful economy. Without a mechanism to transfer companies to the next generation of business leaders, companies can stagnate, downsize, relocate, or even close.
“The Wales Management Succession Fund endeavours to meet this gap in the Welsh market by providing funding to businesses where an acquisition will help safeguard jobs within the business in Wales; jobs which would have been lost if no buyer for the business could be found, or where the business would otherwise be relocated.
“This is the first time in our history that we have secured equity investment at fund level, and is an important step in diversifying our funding sources as a model for future fundraising. This investment by the Clwyd Pension Fund will enable us to support Welsh businesses to transition their leadership, create and safeguard jobs and ensure business longevity for a more prosperous Wales.”