Still tough times ahead says North East venture capitalist
A NORTH East venture capitalist whose company grew by 41% on the back of recovery in the equity and property markets last year is warning that 2010 will be another tough year.
Middleton Enterprises, the investment firm run by Newcastle-based Jeremy Middleton, grew its net asset value and associated businesses from £39m a year ago to £55m at the end of 2009. The company specialises in investments in North East start-ups alongside property and listed equities.
Mr Middleton said: "It is good but it is coming from a low base. It’s showing the recovery. A year ago, things were very tough in all markets, so it’s showing the bounce back. Most people who invest have had a significant pick-up from a low base.
"I think it’s going to be slow and steady in 2010. Access to credit is still difficult. We are likely to see a reduction in public expenditure which will affect the North East; hopefully we won’t see too much. It’s going to be a tough year."
Mr Middleton was one of the founders of insurance and maintenance giant HomeServe plc in 1990, alongside Richard Harpin, and remains on the company’s executive committee.
HomeServe, which is a FTSE 250 company, remains Middleton Enterprises’ core investment but Mr Middleton, who originally came to the region in 1984 to work for Procter & Gamble, has invested in nine North East businesses in the past five years.
He said: "I’m a minority investor and I’ve often worked with North Star Equity Investors. I’m interested in companies in the North East that I can stay in touch with and add value to.
"I’ve always looked at start-ups which is a pretty risky area. It’s really backing the person and the idea."
Rather than searching for potential investments in 2010, he says this will be a year of consolidation.
"I’m looking to try to develop the half-dozen companies I invested in as start-ups a few years ago and get them to maturity, so that’s the challenge," said Mr Middleton.
The company also offers strategic advice to the companies it invests in, which include Ethical Superstores Ltd, the UK’s largest ethical online retailer.
Mr Middleton is a significant shareholder in the Team Valley business, which merged with leading competitor Natural Collection last April.
He was also an early-stage investor in Tanfield Foods, based in Consett, which supplies gourmet food-to-go to customers including Tesco.
"The recovery in equity and property prices has really driven my investments forward in 2009," said Mr Middleton.
"As well as a strong growth in HomeServe plc, which saw its share price increase from 980p in December 2008 to 1719p in 12 months, the new and existing private equity investments have also proved successful in 2009.
"It is heartening to see strong performance from businesses which have found clearly-defined positions in their market places and provide high-quality products and services to strengthen those positions."