Competitive Regions – shaping best practice Sheffield, 9 October 2003 Presentation on Support to SMEs

Background Launched in 1996 as a unique £25m fund Private sector/public sector partnership Central to Objective One Programme Proven Demand for gap finance in the SME marketplace

Structure  Company Limited by Guarantee  Stakeholders - Bank of England, Chamber Of Commerce, MSIF Partners  Private Sector investors plus ERDF  MSIF Board of Directors (non-executive)  Fund Management (executive)

MSIF’s Role on Merseyside  To help businesses get started or expand  Improve the Merseyside economy  Create and save jobs

Track Record – Objective One Programme £32m successfully invested 600 businesses backed 5000 jobs created or saved £88m private sector money levered in MSIF model replicated in South Yorkshire, Wales and Cornwall

 ERDF£ 36m  Barclays Bank£ 22m  Merseyside Pension Fund£ 22m Objective One Programme An £80m fund £80m for Merseyside Businesses

Targets  Support 1,000 businesses  Create 7,500 jobs Preserve 5,200 jobs  £150m private sector leverage  Make commercial returns to ensure sustainability

Types of Support Available  Loans  Loans with an equity-based premium  Venture Capital  Management Support NO GRANTS  Up to 50% of the total amount needed

What we look for  Strong, balanced management team  Commercial Viability  Committed, capable and focused leadership  Quality Business Plan  Great ideas, innovation, unique product or service, proven demand

Situations in which we Operate  Start-ups  Businesses needing working/development capital  Rescue – out of receivership  MBOs, MBIs  Syndicated deals

Small Firms Fund £20M  Loans £3k to £100k  Fixed interest rates  Interest Rebate – one third  Business support post investment  Sole traders, partnerships, limited companies

Mezzanine Fund £20M  Loans £100k to £1m  Floating interest rate  33% interest rebate  Exit premium  Support via Non-Exec Directors  Limited companies only

Venture Fund £40M  Equity up to £2m  Business support post investment  Limited Companies only

Why the model has worked  Established market need – products tailored to those needs  Partnerships/Relationships/Profile  Management Support  Terms of deal balance business needs with commerciality

Fund Management Alliance Fund Managers - newly established fund management company £123 million under management – now one of UK’s largest regional fund managers Culture and approach

THE VISION  A lasting institution to serve SMEs  Plugging a growing “funding gap”  Working with local partners  Targets in the perceived growth sectors  Continued value for money within Objective One Programme

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