Friday, August 12, 2022

UK equity investment increases, with the East Midlands securing £76m in 2020

The British Business Bank’s Small Business Equity Tracker 2021 published today (Wednesday 16 June) shows that equity investment in the UK’s smaller businesses increased by nine per cent in 2020 to £8.8bn, the highest annual investment amount since the data series began in 2011.

Businesses in the East Midlands secured two per cent of UK equity investment in 2020 (£76m). This is a 167 per cent increase on the £29m invested in 2019.

Despite this, the East Midlands remains under-represented in its share of UK equity investment compared to the region’s share of high growth businesses.

The British Business Bank backed 10 per cent of equity deals in the West and East Midlands in 2020 – a steady increase for the past five years and bucking the trend of the overall equity market at five per cent. The British Business Bank’s supported equity deals are becoming more regionally diverse, with deals undertaken in London reducing sharply from 68 per cent in 2016 to 42 per cent in 2020.

This shift signals a positive change for regional  businesses  and has been driven by increased activity from the Midlands Engine Investment Fund (MEIF) and the Bank’s range of equity programmes.

Across the region, the share of MEIF-supported equity deals has increased from 20 per cent in 2019 to 25 per cent in 2020. The Fund has provided finance to over 350 smaller businesses in the West Midlands, East and South Midlands.

Dr Sophie Dale-Black, UK Network Director, Midlands at the British Business Bank, said: “The East Midlands is home to many innovative and ambitious businesses which we can see through the increase in value of equity investment being secured to unlock growth, develop new technologies and bring products to market.

“While it is positive that there appears to be a continued shift away from regional imbalances in terms of access to finance, it is clear that there is a long way to go to fully realise the potential in the East Midlands and unlock further growth for smaller businesses.”

The Equity Tracker report also revealed that a key contributing factor to the growth of UK equity finance deployed has been increasing investment in deep tech companies, which has grown rapidly in the past five years – rising 291 per cent to £2.3bn in 2020.

The strong momentum in the UK is continuing into Q1 2021, with the total equity investment in smaller businesses reaching £4.5bn. This is the highest amount ever recorded in a single quarter.

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