The Development Bank of Wales has significantly ramped up its equity investment activity as it continues to back the growth potential of firms.
In its last financial year to the end of March, 2023, it invested £22.9m compared to £11.6m a year earlier - a rise of 97%. Nearly half of the equity (£10.9m) went into 31 tech firms. It said as its accounts have yet to be fully audited it is current unable to provide figures on the value of any equity investments written off o return on investment from any exits.
The development bank, which is wholly-owned by the Welsh Government, made 516 individual equity and debt investments totaling £124.2m in 2022/23, which leveraged £114.5m of private sector co-investment. The average deal size grew by 14% to £240,748.
Some £9.9m was used to make 320 micro loans of up to £50,000. The bank said it investment and lending activities created 2,552 jobs while safeguarding 2,117. Moreover, £19.25m of investment was made into 114 young entrepreneurs.
The commercial property sector also saw significant growth, with funding for 71,882 square feet of new premises. Investments totaling £6.67m from the Commercial Property Fund represented almost double the investment made in 2021/22.
Economy Minister Vaughan Gething said: “The Development Bank of Wales is going from strength to strength in providing innovative, responsive support that businesses need now more than ever.
“Across a year when economic conditions and uncertainties led many high street lenders to be more risk averse, retrenching their positions, the Development Bank has helped keep a vital flow of accessible finance available to businesses right across Wales.
“The Welsh Government took bold action in creating the UK’s first regional bank with a service that is able to act at scale while understanding the needs of the Welsh economy.
“The broad suite of funds offered by the Development Bank of Wales has helped hundreds of businesses leverage investment and secure the funding they need to invest and grow, and I would encourage businesses to consider whether the bank could support their next steps.”
Chair of the Development Bank of Wales, Gareth Bullock said: Against a backdrop of rising inflation, economic uncertainty and significant cost of living pressures, we entered the year more determined than ever to ensure that we had the funding and the firepower necessary to meet customer demand.
“I am pleased that we have continued to grow overall investment levels, supporting a broad range of businesses across the nation and playing our part in making sure that ambitious businesses can access the investment they need. We will maintain that focus on delivery in the coming year, working together with our stakeholders in the Welsh ecosystem to support people, businesses and communities across Wales.”
The development bank’s chief executive, Giles Thorley, said: “As one of the most active venture capital investors in the UK, we’ve continued to work with the private sector and new funds entering the market to maximise the value for Wales. We have also put significant effort into promoting equity as being a key enabler of business growth. It plays an important role in the complete life cycle from seed and early- stage investment through to established, privately-owned businesses looking to fund succession and exit. Indeed, over £20m was invested in succession deals during the year, retaining wealth and goodwill in Wales.
“2022/23 has also seen us further grow our role as a responsible investor, evolving our decision-making processes to increasingly focus on environmental, social and governance factors. We’ve signed up to the world’s largest voluntary corporate sustainability initiative, Principles for Responsible Investment (PRI) and launched two new products that are already helping fund Welsh businesses to reduce their carbon emissions and embrace the journey to net zero as part of our commitment to promoting and advancing a green future in Wales.
“We’ve delivered a creditable performance for Wales in the last year and will continue to focus on maintaining the support for the long-term sustainability of the Welsh economy.”
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