An increase in the overall volume and value of deals coupled with high levels of co-investment in Welsh businesses has resulted in a strong performance by the Development Bank of Wales in 2021/22 according to the latest figures that have been published today.
519 investments with an average deal value of £210,276 were made in more than 460 Welsh businesses during the year ending 31 March 2022, with just over half of investments (51%) awarded to existing customers. Total investment was £109.1 million, an increase of £3.6 million compared to business as usual in 2020/21.
At formation in 2017, the Development Bank was tasked with reaching an annual investment target of more than £80 million by 2022. That initial target was achieved just two years later in the financial year ending 31 March 2019. The Bank has since gone on to record investments in excess of £100 million each year with a total impact over the first five-year period of £1.2 billion, including £400m in co-investment from the private sector.
Co-investment in 2021/22 reached £64.1 million, an increase of £4.1 million on 2020/21 as the Development Bank continues to focus on working with the private sector to maximise the flow of private capital in Wales. £30.3 million of the co-investment was for tech ventures.
The investor base held by Angels Invest Wales grew to 299 and there were 92 individual angel investments during the year totalling £3.3 million compared to £2.6 million in 2020/21. Through co-investment, AIW had a total cumulative impact of £8.6mm - including £1.65 million in match-funding by lead Angel investor syndicates. 10% of investors registered with AIW are women.
With a customer portfolio of almost 3,000 Welsh businesses, the Development Bank now manages funds totalling £1.9 billion including the £32.5 million for micro loan funding which continues to be popular for start-ups and small businesses in Wales.
Micro loans of up to £50,000 across all funds accounted for 70% of total investments made by the Development Bank during the year, of which almost half were fast track loans with a lending decision targeted within 48 hours. 140 fast track loans totalling £2.39 million were awarded in 2021/22 compared to 93 in 2020/21. Start-up investment also increased from £7.5 million to £8.8 million with 135 investments in 2021/22 compared to 122 in the previous year.
The Development Bank saw particular growth in North Wales with businesses in the region receiving £30.1m from the overall value of deals compared to £25m in the previous year. South East Wales had £47m and Mid and West Wales reported £32.1m. 3,540 jobs were created or safeguarded during the year across Wales.
Economy Minister, Vaughan Gething, said: “Helping businesses get the finance they need to develop and grow is at the heart of what the Development Bank of Wales delivers. Improving on previous year’s performance to deliver investments of £109m into Welsh businesses, increasing the overall volume and value of deals and delivering high levels of co-investment is a great achievement within incredibly challenging economic times.
“These results underline the vital role the Development Bank is playing - stepping into the gap when businesses with strong and viable plans cannot access the finance they need from mainstream providers.
“Welsh Government funding has expanded the Development Bank’s flexible funds, which will continue to adapt and support emerging needs and we look forward to continuing to work with the Development Bank as it continues to support businesses’ growth and ambitions across Wales.”
Gareth Bullock, Chair of the Development Bank of Wales said: “We complete our first five years having reached a scale and breadth of offer that exceeds our initial ambitions. Annual investment has reached almost £110 million, with total impact over five years reaching £1.2 billion against a target of £1 billion.
“The results for the last year represent a strong performance by the team during a period of continued uncertainty with the ongoing impact of the coronavirus pandemic, challenges as a result of our exit from the EU and the pressure on public finances. However, this isn’t just a numbers game. The real impact of our work should be measured in the difference that we make; maximising the flow of private capital in Wales, developing the ecosystem, facilitating an entrepreneurial culture and supporting Welsh businesses to achieve their full potential in line with Government policy. That was our focus in 2021/22 and will continue to be so as we move forward with the next phase of our evolution because when Welsh businesses are strong, Wales is strong.”
Chief Executive Giles Thorley said: “Our strategic direction continues to evolve to meet growth demands and the changing needs of stakeholders and customers right across Wales. The results for 2021/22 are a reflection of our commitment to being flexible and responsive to changing
market needs. We’re using real time market analysis produced by Economic Intelligence Wales to inform these needs and combine expert delivery with a value for money service, ensuring efficient use of public funds.
“It’s been a year of focussing on business as usual and I’m encouraged that we achieved budget despite the ongoing challenges of the pandemic. We’ve worked hard to attract more capital by developing the ecosystem and working with co-investors. We’ve also collaborated with colleagues at Business Wales to ensure that the customer journey is joined-up. In fact, we received 320 referrals from Business Wales during the year.
“We supplied finance across business sectors, to all business sizes and in all regions of Wales in 2021/22 and we’ve seen four successful exits with a combined return of £3.5 million. Demand for funding from the property sector remains particularly strong with investment in 19 projects across Wales as we support developers with flexible short-term loans to help manage supply chain issues and rising costs.
“As a patient investor, our focus is on helping businesses to start-up and grow. This long-term approach is particularly important in the tech sector where we provide follow-on funding for those companies that have benefitted from seed and early stage equity finance. The last year saw £11.6 million invested in 25 tech ventures and we continue to have strong interest from businesses looking to secure equity investment.
“In our next five years, we will further extend our range of services to target the climate emergency and will become an important financial enabler of the efforts by Welsh business to reduce their carbon footprint. It’s all about taking a long-term view as we continue to support the economy of Wales by making it easier for businesses to get the finance needed to start up, strengthen and grow.”