exemplas - realising potential

The East of England Co-investment Fund (COIN) is designed for companies with viable business propositions, who are looking for investment capital to finance their growth plans and are keen to ‘team up’ with a private equity investor. Additionally, private investors will often bring valuable skills to the partnership. COIN invests money provided by the European Regional Development Fund (ERDF), alongside private equity investment, into new and expanding companies based in deprived areas in the East of England.

The COIN fund was set up in July 2004 with a pot of £3.6 million in funding to invest until December 2008. Exemplas Ltd was selected to oversee the programme because of the company’s excellent reputation and substantial experience in project managing a varied portfolio which has included many DTI (now the Department for Business, Enterprise and Regulatory Reform or DBERR) and European funded projects.

Exemplas Ltd was approached by representatives of the European Union’s ERDF to advise on the best ways to invest funding which would stimulate economic development in some of the most deprived areas in the East of England. The selection of Exemplas was based on its excellent record in designing and implementing innovative financial projects and European initiatives, as well as its proven ability to respond to challenges swiftly and innovatively.

Investment challenges

ERDF funds are made available to projects on the condition that the funding is matched with private sector investment. Normally, this match is required up-front, before ERDF monies are handed over. However, when Exemplas consulted with some of its extensive database of private investors, or “Business Angels”, they hit a problem. The Business Angels were not comfortable handing over their money to a fund that would be managed by others; as they prefer to make the decisions about where to invest their money themselves. Therefore, the original idea of collecting the private investment up-front needed re-thinking.

Innovative solutions

Exemplas came up with an innovative solution. They asked Business Angels to invest alongside the fund on a deal by deal basis; meeting their requirements to be much more involved in investments whilst at the same time satisfying the ERDF condition of private sector matched funding.

The COIN fund is an excellent example of how Exemplas’ innovative approach tackled a previously unresolved challenge; in fact the pioneering idea had to first get the approval of the European Commission in order to proceed.

By designing and implementing the COIN fund, Exemplas has proven that it has the ability to provide innovative solutions, is an effective and efficient partner and is able to deliver contracts successfully.

Refilling the funding pot

Most European funding takes the form of grants which are normally provided as one off payments which are then spent and ‘used up’. By investing in companies using ERDF monies, once the shares held by the fund are sold, the COIN fund ensures that a sustainable legacy fund will be created, enabling the investment process to begin again.

The aim is that the value of the shares will increase, as companies that benefit from this investment are able to make positive changes that help them to grow and prosper. This is recognised by Government Office as an exceptionally good use of public monies, in that it not only saves and creates jobs, but also generates wealth and a sustainable funding programme.

Everyone benefits

Companies, local people and investors all benefit from the COIN fund, which helps create wealth and employment in the East of England, especially in deprived areas that are in need of financial support.

The COIN fund has made a number of investments that demonstrate good potential for wealth and job creation. William Clowes Ltd, a book publishing company based in Lowestoft in Suffolk, benefited from a £425,000 COIN Fund investment from Exemplas. The money enabled the company to raise further finance, safeguard 150 jobs, create 45 new ones, increase turnover and put the company back into profit.

The fund provides opportunities for private equity investors looking for companies to invest in, to access businesses that are based in deprived areas in the East of England.

Trident Energy, based in Southend-on-Sea in Essex, has developed a method of generating electricity using floats placed in the sea to capture wave energy. “We are delighted to have Exemplas as a shareholder, as their investment has enabled us to substantially extend our international patent filing process”, said Hugh-Peter Kelly, Managing Director of Trident Energy.