What is the Invest to Grow Fund?
The Invest to Grow fund has been set up by Basingstoke and Deane Borough Council to support a wide range of commercial and regeneration property and infrastructure projects within the area. The fund is seeking to invest in projects where there is a clear benefit to the local employment, regeneration, environmental and economic prospects. Development proposals must align with the council’s aspirations for growth.
How much funding is available?
The fund has access and approval to resources of up to £25 million. In accordance with the current agreed Investment Strategy for the fund, the maximum investment size per project is £10 million. The minimum investment size is £1 million.
What form of funding is available?
The fund is able to be flexible and can provide debt or equity, structured to meet the particular needs of a project. Investments will be structured on a State Aid compliant basis providing commercial risk adjusted market returns. The fund will not provide grants.
Where is the Invest to Grow Fund able to invest?
Investments are to be made within the borough as a priority, although the fund will consider investment options within Hampshire and wider South East where ‘additive’ to the borough.
What types of projects can the fund invest in?
The fund is flexible as to the type of projects it can make investments in. All projects, however, must adhere to one of four strands within the council’s Property & Alternative Investment Strategy, namely: commercial property investment; housing, regeneration and alternative investment; renewable (green) investments; or the Council’s existing portfolio. All projects require an exit strategy to ensure they have a short term pay back so the funds may be recycled and re-invested into new projects as efficiently as possible.
What do we look for in transactions?
The fund will consider investing in a range of projects. Developers will be required to demonstrate appropriate experience and skill, along with an upfront equity commitment to the project. Prior to any commitment by the fund, applicants must be able to demonstrate their project is viable, the developer has the necessary control over land to enable delivery, the relevant planning consent has been secured, and a clear exit strategy is in place. We will also be pleased to consider longer term investment opportunities for the fund where any of the above are not yet in place.
On what criteria are schemes appraised?
All investments will be subject to appropriate risk assessments, business case assessments and due diligence by the Fund Adviser and must fulfil the requirements of the fund’s approved Investment Strategy. The main considerations in selecting investments made by the fund will be to:
- Determine how projects will assist in delivering one or more of the council’s economic priorities, including a contribution to the overarching ambition of jobs, homes and inward investment.
- Ensure the scheme is viable with an appropriate risk vs return profile.
- Provide a comparison of the proposed investment against other potential investments made by the fund; including the schemes proposed contribution to the council’s economic priorities per £ of investment, and the comparative risks of delivery and repayment.
The key financial considerations for fund investments are:
- Coupon – allocated on a project by project basis, having regard to the EC Reference Rate methodology (2008/C 14/02).
- Draw down profile – to correspond with fund headroom.
- Payback period/exit arrangements – to enable funding to be recycled.
- Loan security – to include external credit rating of prospective partners, schemes and collateralisation factors.
- Risk profile and sensitivity analysis – related to the status of the development partner and scheme viability.
- Quantum of loan – related to the fund and scheme size.
- Leverage – private sector capital released through the fund intervention.
Providing deliverability and financial considerations are satisfied, investment will then be prioritised on the basis of:
- Comparative regenerative impact – measured against local economic priority outputs.
- Sector distribution – according to the Council Property and Alternative Investment Strategy.
- Nature of investment activity – managing the risk profile between equity and debt investments.
How are interest rates calculated?
Under State Aid regulations, we are required to charge a market rate for loans. This rate will vary depending upon a number of factors, but we consider that we will always be competitive for the type of lending that we offer. We can provide you with high level loan parameters and an indicative interest rate relatively quickly.
How do I apply for funding?
The first stage of the process is to contact CBRE, who is the appointed Fund Advisor, either directly or through the online application process. CBRE’s role is to source and evaluate potential investments for the Fund, as well as manage and monitor the developments over the investment life-cycle. CBRE will request initial project information for consideration as to whether a detailed application for funding is to be made. Subject to passing this initial assessment process, you will be invited to put forward a detailed application.
How quickly can terms be agreed?
The fund has necessary procedures and delegated authority in place to make decisions based on recommendations of the appointed Fund Advisor. As a result, we can usually issue agreed terms within 3-4 weeks. Typically, we would recommend allowing circa 6-10 weeks for full due diligence and documentation approval assuming all relevant project information is readily provided.
What do I do next?
In the event that the proposed project that requires finance meets the objectives of the fund, please submit an application form via this website or contact CBRE.