Sheffield-based British Business Bank, the UK government’s economic development bank, announced a new cornerstone commitment of £60 million to the NorthEdge IV fund, made under the bank’s new Growth Equity strategy.
The fund is run by Manchester private equity firm NorthEdge.
Under this new mandate, the British Business Bank will be able to invest into private equity funds focused on backing smaller businesses.
The Growth Equity strategy will invest on a fully commercial basis across generalist and thematic strategies, with a focus on funds that are aligned with the eight growth-driving sectors of the Government’s modern Industrial Strategy.
The mandate will unlock scale-up capital and expertise for smaller businesses.
The British Business Bank said: “With limited UK-based institutional capital historically allocated to the asset class, particularly in the lower mid-market, this new mandate will enable the Bank to make targeted investments into these funds; crowd in additional private capital; and ensure that the most promising UK smaller businesses have the finance they need to scale and stay in the UK.
“NorthEdge is a well-established regional private equity firm headquartered in Manchester with a focus on backing businesses in the lower mid-market.
“To date, it has invested over £780m into 49 companies from four regionally-focused funds. In 2024, its portfolio contributed £656m of Gross Value Added (GVA) to the UK economy and supported almost 10,000 jobs, with around 70% of its impact generated in the UK Nations and regions outside of London and the South East.
“Fund IV enables NorthEdge to invest in more founder-led businesses and SMEs across the UK’s Nations and regions. The Fund will focus on the Technology, Healthcare and Business Services sectors, making investments of £8m-£50m for controlling or significant minority equity stakes to accelerate the scaling of portfolio businesses.
“The fund will also utilise co-investments to fund larger deals and follow-on investments. As a cornerstone investor, the British Business Bank will have the opportunity to participate in co-investments alongside the fund.”
Adam Kelly, Managing Director and Co-Head of Funds, British Business Bank, said: “Scaling up smaller businesses in the UK’s Nations and regions is key to achieving the government’s growth mission.
“Under this new Growth Equity strategy, we can back more innovative businesses and crowd in further private capital. We are pleased to make this £60m commitment to NorthEdge under the strategy, backing UK businesses with the finance they need to scale and stay in the UK.
Lucie Mills, Partner, NorthEdge said: “We are delighted to have the support of the British Business Bank as a cornerstone investor for NorthEdge IV.
“Our investment strategy has always been focussed on building businesses of national and international importance from the UK regions, so it is fantastic to have a leading UK institution backing a UK-focussed fund – reinforcing our shared commitment to driving growth across the Nations and regions of the UK.
“The British Business Bank’s support, alongside the support from a number of our existing investors and LGPS Funds, enables us to continue partnering with ambitious businesses and management teams to deliver meaningful regional and economic impact.”