Finance Wales Is Playing a Key Role; Frank Holmes of Gambit Corporate Finance Reflects on the Second Report into the Access to Finance Review
Last week the second stage of the Access to Finance Review was released.
Compiled by Professor Dylan Jones-Evans, it questioned whether Finance Wales was "fit for purpose" and recommended the establishment of a Development Bank of Wales to manage its funds, as well as other financial support schemes.
As anticipated, the report has been the subject of much media coverage and exchanges within the business community and local government.
Private sector sentiment until now has warmed to the decisive and proactive stance of the Business Minister Edwina Hart, but this report is potentially divisive because of the threat of interventionism whilst resurrecting memories of the WDA demise.
Commentators in last week's media included "business leaders" in the guise of representatives of private sector membership bodies and politicians across the main parties who publicly questioned the "higher rates" of interest on loans made by Finance Wales.
Some of these remarks were, at best, naive and demonstrated a lack of understanding of private sector financial markets and the deployment of debt funding by specialist institutional lenders.
Notably, there was little comment from business owners and wealth creators who have had to face the reality of prevailing market conditions and the availability of debt finance and investment capital either in Wales or beyond.
Indeed, the author, who has been honoured for his significant and commendable development of the Fast Growth 50 awards to recognise fast growing Welsh SMEs, should know that over the last five years an average of around 25% of the recipients of the Fast Growth 50 nominations have received financial support from Finance Wales, a lifeline for some of them.
Those of us who, on a daily basis, deal with SMEs seeking funding are only too aware of the vital role Finance Wales has played in sustaining Welsh business over the last five years of this Great Recession.
As an established institution, it has come a long way in its professionalism and expertise.
Outside of the Principality, Finance Wales has a positive reputation among the UK's financial community and is a trusted co-investor to partner with non-Welsh institutional investors on local transactions.
Interestingly, Professor Jones-Evans was a director of FinanceWales for several years when Objective 1 and 2 funds attracted interest rates of 11.75%.
It is actually easy to demonstrate that the "higher interest" rates are UK market facing, for the level of risk and anticipated returns required to responsibly deploy unsecured funds, which inevitably sit behind the banks in any security ranking. …