A TRAILBLAZING £10m fund, which helps North-East firms bid for work, has made its first loan.
The first company to benefit from the scheme is Process Control Equipment Ltd (PCE), based in Thornaby, near Stockton with bases in Scotland, Spain, Holland and Germany, specialising in the supply of industrial valves, actuators and controls for the, oil, gas and petrochemical industries.
Managed by fund manager, FW Capital, the Tees Valley Catalyst Fund, is backed by the Government’s Regional Growth Fund, and provides loans for performance bond guarantees. Performance bonds provide a financial guarantee to a client that a supplier will deliver on time and to standard.
PCE has secured three contracts, worth more than £10m, to supply the multibillion dollar Sadara project, which involves the construction and operation of a chemicals complex in Saudi Arabia. PCE has been awarded a performance bond loan worth £1.1m.
Barry Jackson, the firm's managing director said: “This fund is a boon for businesses as it opens up opportunities and removes barriers. The loan means that we have not had to tie up a substantial amount of our working capital and as a result we will be able to be more adventurous and ambitious as we bid for future work.”
It is anticipated that the Tees Valley Catalyst Fund will unlock almost £700million of additional work and support 1,440 jobs in Tees Valley during the next ten years.
Funding, usually required for a relatively short period of typically 18 to 24 months from contract confirmation to completion, is released in staged payments by main contractors up to final sign-off and/or release of the bond.
Although primarily aimed at SMEs, larger companies, which may already have a bond facility in place, can access the fund to extend their existing facility to account for significant, one-off contracts for which they otherwise may be unable to bid.
Stephen Catchpole, managing director of TVU,said: “This first investment shows how a trailblazing scheme which we developed to fulfil a pressing business need, can make a tangible difference to Tees Valley companies.
“TVU is committed to helping overcome barriers that prevent local companies from securing work that allows them to grow, take on new staff and expand their customer base.”
The Tees Valley Catalyst Fund was devised following feedback from companies which highlighted that while technical expertise led to shortlisting at tender stage, a lack of cash reserves prevented them from setting up the required bond and progressing through to final contract.
The fund is an ‘evergreen’ fund with interest and repayments on loans being ploughed back and recycled into new lending.
Joanne Pratt, FW Capital’s fund manager in the North-East, said: “The Tees Valley Catalyst Fund’s first loan to PCE is a key milestone and demonstrates how the Fund is backing local businesses to win significant new contracts.
"Many Tees Valley businesses have the capability and capacity to secure new contracts and now, thanks to the Tees Valley Catalyst Fund, they can also access finance for the performance bonds that are often required. We wish PCE well with these exciting contracts.”
Chris Johnson FW Capital an investment executive worked with PCE to agree the loan. He said: “PCE is a well-established and highly regarded Tees Valley business with an impressive management team and long-term vision. I’m pleased to have been able to work with Barry and his team as well as Barclays and the company’s accountants, Clive Owen and Co. to structure a loan that provided the financial backing they needed to service these significant contracts.”
Aaron Clark, relationship director at Barclays Bank, who introduced PCE to the support of the fund to assist with business growth, said: “The Tees Valley Catalyst Fund provides a vital stimulus to allow companies to tender for more ambitious, significant contracts.
"Barclays are delighted to have the opportunity to support businesses like PCE which have exciting growth prospects. It’s also fantastic to be at the cutting edge of supporting regional growth as the first bank to work with clients accessing the fund.”
Ben Williamson, associate director at accountants Clive Owen and Co LLP, which helped facilitate PCE’s application, said: “The Tees Valley Catalyst Fund helps give Tees Valley firms the financial muscle needed to access new markets and opportunities for growth.
"It is satisfying to see that, with our support, PCE is the first company to benefit from the loan scheme.”
Companies interested in the Tees Valley Catalyst Fund should visit www.fwcapital.co.uk/catalystfund or call the Tees Valley investment team on 01642 343 494