In the financial year ending 31st March 2019 the Development Bank of Wales invested a total of £80m, an increase of nearly 18% on the year before. 420 investments were completed across the whole of Wales during the year – 30% more than the previous 12 months.
Changes in the development bank’s business model are driving investment growth, improving the customer journey and extending the range of products available. The opening of its Wrexham headquarters in September also led to more deals completing in North Wales.
The development bank’s investments were spread across the country, with £37m invested in South Wales £26m in mid and West Wales, and £17m in North Wales.
£21m was in equity, a third in 23 companies in the Cardiff equity hot-spot and another £5 million in West Wales.
The amount of private sector investment leveraged by the bank’s activities reached £126m, boosted through a share placing by Creo Medical, the Chepstow-based medical equipment company, which raised £46m.
Since extending its loan repayment terms to 10 years, the bank has also seen an increase in demand for patient capital with 97 customers taking advantage of the enhanced terms.
220 micro loans were completed in the year and the rising demand has been attributed to service improvements – loans between £1,000 and £50,000 are now easier to access and businesses that have been trading for two years or more are benefitting from speedier decision making and significantly less paperwork with some lending decisions being made within 48 hours.
There was significant growth in the bank’s challenge to support the property sector in Wales with investments reaching £24 million, an increase of 54% on the previous year. More than 80% of these transactions came from dedicated property funds, the fastest growing part of the bank’s investment activity.
The value of funds to support the construction sector now totals £177m with the launch of the £55m Wales Commercial Property Fund.
Together with other funds raised including the £50m Wales Tourism Fund and the £16m Wales Micro Loan Fund this brings total fundraising for the year close to £200m and over £430m since it was launched in 2017.
During the year the bank launched Angels Invest Wales alongside the £8m Wales Angel Co-Investment Fund. The refreshed offer gives business access to more than 100 angel investors and syndicates through its online platform. Deals of more than £3m were facilitated in the year.
The bank also secured institutional equity investment for the first time, with £10m being invested by the Clwyd Pension Fund into the Wales Management Succession Fund.
One business the bank has helped is recruitment business ALS Managed Services, which provides an innovative, ethical and sustainable recruitment service to the recycling and warehousing sectors from its headquarters in Caerphilly.
Together with HSBC, the development bank provided a combined funding package of more than £1m, allowing the majority shareholders to exit the business. The transaction saw the bank take a 20% equity stake in the new business, and its investment via the Wales Management Succession Fund allowed ALS to move into new 3,500 sq. ft. premises and increase its service offering to clients.
ALS Chief Executive Officer Steve Lanigan said: “The support and guidance from the team at the Development Bank of Wales has been instrumental over the last 18 months. Their experience of providing funding for MBOs coupled with their understanding of our business goals means that we have found an investor that genuinely shares our excitement and passion. That’s worth so much more than just the money.”
Giles Thorley, Chief Executive of the Development Bank said: “I am pleased that so many businesses right across Wales have been able to access the right finance to support their journey this year. We have increased our delivery capability and continue to invest in the customer experience as we progress with our business transformation.
We may be facing a time of uncertainty, but the Development Bank of Wales will be working to ensure that whatever form Brexit may take, Welsh businesses will be supported. I am proud to work with a dedicated team that want to have a positive impact on the Welsh economy.”
Economy and Transport Minister Ken Skates said: “This has been a landmark year for the Development Bank and I congratulate it on achieving its five year annual investment target of £80 million in just eighteen months.
“The Bank, both directly and in partnership with Business Wales and private investors, has added significant value to the Welsh economy, with the increased activity in the property market particularly pleasing.
“The past twelve months have also seen the Bank move to its new headquarters in Wrexham, further demonstrating the Welsh Government’s commitment that the Bank truly serves the whole of Wales and strengthens our regional economies. There is no doubt that the Bank has succeeded in this regard, supporting businesses of all sizes from across Wales to grow and prosper and I look forward to seeing the next twelve months build on these successes as the Bank helps yet more Welsh businesses reach their potential.”
The annual report will be published July 2019.