The founders of a new private equity firm aimed at supporting businesses in the Midlands have spoken to Insider about addressing the regional imbalances in funding.
Managing director of NewHall Capital Rob Freer has more than 30 years of corporate finance and private equity experience, having previously held senior positions at NorthEdge Capital, Royal Bank Private Equity, Lloyds Banking Group, EY and Deloitte.
Freer is joined by David Newton who has previously worked as a corporate financier for EY, investment banks Williams de Broe, Seymour Pierce, XCAP Securities (where he was head of corporate finance) and the Midlands based corporate finance boutique, Cattaneo.
NewHall Capital seeks to address the regional imbalances in the supply of SME equity finance that has historically favoured London and the North of England. It is looking to partner with local management teams committed to growing and developing their businesses.
Freer said: “Unfortunately for many businesses based in the Midlands, there are less options for equity finance because the providers are predominantly based in the North and South of the country, rather than at its heart.
“We have both been successfully working in the regional private equity industry for a number of years and therefore understand that businesses must have investment partners that have a shared passion for the regions they operate in.
“This benefits all parties. Having that local presence allows you to build proper, meaningful relationships. We strongly believe that management teams in the Midlands want to work with someone they know and who is as equally invested in the region as they are.
Newton added: “Unlike us, the majority of equity providers will not work with businesses that have an enterprise value of less than £10m because their funds are generally of a size which means that they are focused on investing larger sums.
“This really holds back the growth and ambition of many companies within the Midlands, particularly those that are young, innovative and have exciting plans that need funding.”
The firm offers a flexible and tailored investment structure with no fixed term fund life and the team invests its own money into the deals it executes and manages.
Newton said: “The fund environment is geared to short term exits to underpin the creation of the next fund, which can lead to misalignment between investors and management teams over the timing of exits.
“We do not have constraints over exit horizons, which allows us to not only be more creative and entrepreneurial in the support we offer but also helps better align our interests with those of the management team.”
Freer also touched on his long-term expectations for the potential growth of the firm.
“We feel the timing is right for a new equity player to come in and invest in quality Midlands businesses looking to play their part in kickstarting the economy and taking advantage of the opportunities that open up as the economy improves.
“We are confident about the future and we look forward to working with these businesses as we build value together.”