First company to benefit from Tees Valley Catalyst Fund is Process Control Equipment (PCE) of Thornaby
A pioneering £10m fund to help companies bid for work has made its first investment.
The Tees Valley Catalyst Fund, which is the first of its kind in the UK and is spearheaded by Tees Valley Unlimited, enables Teesside firms to bid for large commercial contracts, opening up new markets and opportunities and helping to strengthen the local economy.
The first company to benefit from the innovative scheme is Process Control Equipment (PCE) of Thornaby.
With bases in Scotland, Spain, Holland and Germany, it specialises 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 significant contracts that are worth in excess of £10m. PCE’s successful tenders relate to the multi-billion dollar Sadara project, comprising the construction and operation of a world-scale integrated chemicals complex in Saudi Arabia.
PCE has been awarded a performance bond loan worth £1.1m.
Barry Jackson, 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.”
Stephen Catchpole, managing director of Tees Valley Unlimited - the Local Enterprise Partnership - added: “This first investment shows how a trail-blazing 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.”
Barclays Bank introduced PCE to the support of the fund to assist with business growth and accountants Clive Owen and Co LLP helped facilitate PCE’s application.
It is anticipated that the Tees Valley Catalyst Fund will unlock almost £700m of additional work and support approximately 1,440 jobs on Teesside during the next 10 years.
Funding, usually required for a relatively short period of typically 18-24 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 small and medium-sized businesses (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.
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