We have a part to play on road to business recovery
With corporate deal activity at its lowest level for years three experts share their views on the state of the market.
The Private Equity Investor
ALTHOUGH we are in recessionary times, it is nevertheless important to keep things in perspective.
Yes, certain sectors are suffering – automotive, property and construction – but conversely there are some sectors that are thriving – healthcare, cosmetics, food and DIY.
Fund managers at NorthStar are seeing increasing numbers of science and technology-based companies being formed and developed across the region, with demand this year for our early stage funds higher than ever.
Strong momentum has been developed through the universities and long standing initiatives such as the Centres of Excellence (Narec, Cels, Codeworks and the CPI) and more recently Software and Digital City.
It is more difficult for small and medium sized businesses to raise finance in the current economy and we are seeing equity investors having to step in to assist companies with funding where banks would have previously supplied loans and/or overdrafts.
Whilst it is more difficult to raise debt, companies are doing this or are finding alternative forms of investment to keep their businesses growing and to exploit opportunities created by the difficult economic conditions.
Other fund managers that are active in the region include NEL Fund Managers, who continue to invest strongly with the Evolve Fund, Hotspur recently invested alongside our Co Investment Fund in Antix, and last week North-West based Aquarius announced that they are seeking early stage equity deals in the region.
There is evidence that recessions create a fresh generation of entrepreneurs as people face new challenges and are forced to make changes to their working environment, and early stage equity-based funds in the region are ready to support them.
Business surveys are useful indicators of how the economy is performing. The latest quarterly survey from the ICAEW shows that business confidence has improved for the first time in two years, particularly in the banking, finance and insurance sectors and the property market.
None of us can predict with accuracy or confidence what will happen next, but we're arguably entering a period of stability moving towards recovery.
Investment plays a key part in business and as we move towards 2010, we will play our part to help sustain and increase business confidence and activity in the North East.
Marion Bernard - chief executive NorthStar Equity Investors.
Page 2: The Corporate Finance Expert
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