Report reveals 19 new equity deals in NI, with an investment value of over £40m

Equity investment in smaller businesses in Northern Ireland remains positive, but usage of external finance by these firms fell in 2021 and continues to decline in the first half of 2022, according to the British Business Bank’s annual Nations and Regions Tracker.

Between 2017 and 2020 Northern Ireland’s smaller businesses had the highest usage of external finance over the last five years across the UK, peaking at 69%. This fell to 45% in 2021 and by Q2 of 2022 it had reduced again to 36%.

According to the tracker, debt products in the UK continue to be the most widely used finance type, however the makeup of debt products has shifted slightly in the wake of the Covid-19 pandemic.

When it comes to equity finance investment, the Nations and Regions Tracker revealed Northern Ireland was the only devolved nation to experience an increase in the number of deals in 2021.

In 2021 Northern Ireland experienced a 44% increase in the number of deals, rising from 27 in 2020 to 39 the following year. The value of deals which took place here increased by 240%, only the South West of England enjoyed a greater rise in investment value with a 357% rise.

In the first half of 2022 the report outlines that there has been 19 reported equity deals in NI, with an investment value of just over £40.5m, higher than the £22m invested in H1 2021. Whilst current poor global economic conditions are looking likely to impact the remainder of the year, equity investment in Northern Ireland was strong in the first half.

The Nations and Regions Tracker found that businesses in the most deprived areas of the UK are more open to using finance and report higher levels of ambition for growth, whilst facing greater challenges in accessing external finance.

Nearly half (49%) of businesses in the most deprived areas have a long-term ambition to be a significantly larger business, compared to 40% elsewhere. They are also more willing to use external finance to grow (36%) than businesses in less deprived areas (33%).

However, the report found that the growth ambitions of smaller businesses in the UK’s most deprived areas are being stifled because of a lack of access to finance. Just over 14% of firms in Northern Ireland are based in the local most deprived areas, making them more likely to face barriers to growth.

A quarter (26%) of smaller businesses in need of finance in deprived locations did not apply for finance. Of those who did apply between 2020-21, 16% were turned down compared to just 11% elsewhere.

Susan Nightingale, UK network director, Northern Ireland, British Business Bank, said: “The British Business Bank is committed to reducing regional imbalances in access to finance. We are seeing promising signs in Northern Ireland’s equity finance markets, whilst the marked decline in external finance usage brings to life the various economic challenges smaller businesses are facing.

“We know external finance is an important tool for smaller businesses to promote growth and stability. The Bank will continue to increase the supply and diversity of early-stage finance for NI smaller businesses, through the launch of a new £70m Investment Fund for Northern Ireland in 2023.”