The British Business Bank has made a £60m cornerstone commitment to NorthEdge IV under its new Growth Equity strategy, aiming to unlock more private equity capital for smaller UK businesses, particularly outside London and the South East.
The Bank said the new mandate will allow it to invest in private equity funds focused on backing smaller businesses, on a fully commercial basis. It will target generalist and thematic strategies aligned with the Government’s modern Industrial Strategy and its “eight growth-driving sectors”, with an emphasis on scale-up capital and expertise for businesses in the UK’s Nations and regions.
The British Business Bank positioned the strategy as a response to what it described as historically limited UK-based institutional allocations to lower mid-market private equity. It said the approach is intended to make targeted commitments, “crowd in additional private capital”, and help ensure that high-potential smaller businesses can access finance to scale and remain headquartered in the UK.
NorthEdge, which is headquartered in Manchester, invests in the lower mid-market and has raised four regionally-focused funds. The private equity company said it has invested more than £780m into 49 companies to date. NorthEdge also cited 2024 figures showing 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’s Nations and regions outside of London and the South East.
According to the announcement, NorthEdge IV will focus on Technology, Healthcare, and Business Services, and invest £8m to £50m for controlling or significant minority equity stakes. The fund will also use co-investments to support larger transactions and follow-on funding. As a cornerstone investor, the British Business Bank will have the opportunity to participate in co-investments alongside the fund.
Chancellor of the Exchequer, Rachel Reeves, said: “We are pulling every lever to boost growth — making record investment in our infrastructure and public services, unlocking opportunities for companies through major trade deals, and supporting innovative businesses to start, scale and stay in Britain through our modern Industrial Strategy.
“This major commitment from the British Business Bank to NorthEdge will drive even more growth — unlocking millions of pounds of investment for smaller UK businesses to expand, create new jobs, and keep our country at the cutting edge of frontier tech, life sciences and business services.”
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.”
The commitment lands as policymakers and investors continue to scrutinise the availability of later-stage capital for UK scale-ups, including whether businesses can access domestic funding sources as they move beyond early-stage venture rounds. The British Business Bank’s Growth Equity strategy is framed as an attempt to increase the supply of that capital, with the NorthEdge IV commitment a first visible deployment under the new approach.
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