Foresight Group makes £30m addition to North East Fund

Private equity investor Foresight Group has added £30m to its fund targeting established small and medium-sized businesses in the North East and some of Yorkshire.

The listed regional specialist has secured the additional finance from the Tyne & Wear Pension Fund, taking its North East Fund to £90m. Foresight said negotiations over the investment had been under way for some time with the additional capital making it one of the firm’s largest regional funds.

It follows Foresight’s launch of a Newcastle office in April, in addition to its Leeds base. Between the two sites the firm employs four people with recruitment of a fifth ongoing. The North East Fund, which launched just over a year ago, focusses on deals of up to £10m, and can create co-investment from its many other funds.

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Foresight expects to have created between 15 and 20 deals by 2027. So far there has been three investments across ecommerce, engineering and facilities management companies, including most recently £6.5m into Halifax-based Property Care Services Ltd.

Speaking to BusinessLive, Claire Alvarez, partner at Foresight Group said: “We’re certainly seeing the deal flow and I think that’s a function of lots and lots of marketing activity. There are people in local offices, getting out and meeting lots of introducers, and also creating opportunities. There might be a business that isn’t aware of private equity and the solutions we can offer – a founder, for example, that is thinking about retirement and perhaps hasn’t built a full team beneath them and might need a bit of support with succession planning.

“In those situations we can offer an element of cash out but also help to attract top talent into companies, to support their growth ambitions. I think that’s quite compelling for an entrepreneur because, and we hear it quite often, life can be a bit lonely for them.”

Foresight says it wants to build a diverse portfolio across the fund’s patch, which includes businesses with headquarters, or significant operations in County Durham, Northumberland, Tyne and Wear, Teesside and also North Yorkshire, West Yorkshire, East Riding of Yorkshire, North Lincolnshire and North Yorkshire.

Durham County Council’s Pension Fund originally cornerstoned the pot, with support from Teesside Pension Fund, in June 2022. And in April Foresight announced a second close with £20m from British Business Investments.

Ms Alvarez said that despite challenging economic conditions the Foresight team is still eyeing plenty of opportunities, with four deals in exclusivity being lined up with tech companies, healthcare operators and advanced manufacturing businesses.

Coun Anne Walsh, chair of the pensions committee at South Tyneside Council, said: “We are delighted to support the many promising small and medium sized businesses, located across the North East and Yorkshire, with a £30m commitment to the Foresight North East Fund. Similar to Foresight, we see great potential in the businesses located across the region. Through this investment, we are delighted to contribute to creating high-quality, local jobs, positively impacting the local economy, and, ultimately, positively contributing to the pensions of people in Tyne and Wear.”

So far this year, across its funds, Foresight has invested into more than 35 SMEs and completed a number of exits, including Datapath (11.7x money), Mowgli (3.5x money) and GovGrant (4.5x money).