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In the first deal of its kind a Welsh pension fund has ploughed millions into a Development Bank of Wales fund to support indigenous firms to expand and create new jobs.

The Clwyd Pension Fund is investing £10m in equity into the development bank's Wales Management Succession Fund.

It is hoped this will be the start of wave of Welsh pensions mandating a percentage of funds under management to the Development Bank for Wales to invest and generate returns for its pension policy holders.

The bank's predecessor, Finance Wales, didn't secure any pension fund backing.

The succession fund is managed by the development bank on behalf of the Welsh Government.

The £10m private sector investment completes its fundraising round, having achieved a target of £25m.

The succession fund was established to keep ownership of businesses in Wales, by supporting management teams to buyout owner managers either looking to retire or realise a return from their equity stakes.

The fund provides funding of between £500,000 to £3m.

To date the fund, which has launched in 2016, has invested just over £4m to support management buyout deals including the likes of Glamorgan Telecom, ALS Managed Service, First Choice Accident Repairt Centre, Camtronics Vale and Minerva Laboratories (Coltrun).

With Clwyd Pension Fund backing the enlarged fund will support 20 businesses, with the aim of leveraging a further £15m of private sector funding and creating or safeguarding 1,000 jobs over the next five years.

Economy Minister Ken Skates said: “I am very pleased that Clwyd Pension Fund are investing alongside Welsh Government in the Wales Management Succession Fund.

"Attracting institutional investment at a fund level is a significant step forward in the evolution of the Development Bank of Wales, proving that Wales and Welsh business is an attractive proposition for investors."

Colin Everett, administrator of Clwyd Pension Fund said: “As a forward thinking and responsible investor we actively seek opportunities which deliver on both fund performance and sustainability objectives.

"We are delighted to make this investment which will support economic growth and employment in a segment of the market vital for the health of the Welsh economy.

The investment also underpins the commitment of local authorities, as our principal fund employers, to supporting economic growth in Wales.

Chief executive of the Development Bank of Wales Giles Thorley and group investment director Mike Owen presented an overview of the £10m investment into the Wales Management Succession Fund at Clwyd Pension Fund’s annual meeting with employers and member representatives last November.

Mr Owen said: “Management succession is a critical element of a vibrant and successful economy. Without a mechanism to transfer companies to the next generation of business leaders, companies can stagnate, downsize, relocate, or even close.

“The Wales Management Succession Fund endeavours to meet this gap in the Welsh market by providing funding to businesses where an acquisition will help safeguard jobs within the business in Wales; jobs which would have been lost if no buyer for the business could be found, or where the business would otherwise be relocated.

“This is the first time in our history that we have secured equity investment at fund level, and is an important step in diversifying our funding sources as a model for future fundraising.

"This investment by the Clwyd Pension Fund will enable us to support Welsh businesses to transition their leadership, create and safeguard jobs and ensure business longevity for a more prosperous Wales.”