The word on the street

13/07/07

Experts tip North Wales as the place to invest

North Wales has been tipped by economic and investment experts as one of the best places to invest over the coming months.

Already home to a growing number of successful technology driven businesses including Trace Technologies and London Stock Exchange (LSE) hopeful Ewloe-based Moneysupermarket.com, the region is fast becoming the destination of choice for private equity investors and business angels across the UK.

Part of its growing appeal lies in its location according to David Smith, Economics Editor at the Sunday Times.

Addressing more than 200 private equity investors and UK business angels at an event organised in association with Finance Wales plc  recently, Mr Smith said: “Investors regularly look to emerging markets such as India, China, Russia and Brazil when they want good returns on their investments, but often forget to spot the opportunities on their own doorstep.

“The UK has shown 60 consecutive quarters of economic growth which is a remarkable run for an economy previously subject to high inflation and prone to recession. This is the result of a combination of stringent micro-economic reform on the supply side, the flexibility established during the 1980s and better macro-economic management coupled with extremely low levels of inflation.”

Although the UK economy is not expected to yield the same returns as emerging markets over the next few quarters, Mr Smith believes Wales and the rest of the UK will continue to offer opportunities for investors wanting to capitalise on this winning combination of economic growth and low inflation.

Private equity investors like Geoff Andrews who acquired a stake in highly successful early stage business Trace Technologies a year ago are already benefiting from this stable economic climate and Wales’ connected financial and investment support framework.

A business angel with xénos, the Wales Business Angel Network, a subsidiary of Finance Wales plc, Mr Andrews played a key role in the syndicated investment with Finance Wales plc of the St Asaph-based opto-electronics company after its founders acquired the intellectual property rights to a software programme previously developed by a BAe Systems-led consortium.

The software known as Photonic Interconnect System Designer (PISD) is an engineering tool which greatly reduces the time and costs involved in the design and testing of fibre optic wire harnesses used in aircraft, ships, cars and other defence vehicles.

Traditionally wire harnesses are copper-based making them very heavy with limited bandwidth and scope for future applications. Fibre optic cabling is much lighter, but it takes up to a year to install the hundreds of miles of cabling needed in just one large aircraft. PISD reduces the lead time to a few months.

Commenting on his investment, Mr Andrews said it was the knowledge that the company had already acquired the intellectual property rights to PISD that first attracted him to the venture.

“Trace Technologies very cleverly negotiated an exclusive licence to turn the consortium-led research and development and intellectual property into an engineering tool and furthermore managed to negotiate a complete purchase of the software.

“However, it was important for the company to prove that its product was saleable before the completion of its product development. This resulted in a number of orders from Airbus months before the company was launched.”

His first private equity investment since completing a once in a lifetime management buyout of Pilkington and then being heavily involved in the development of Technium OpTIC in St Asaph, Mr Andrews was able to benefit from Wales’ highly connected early stage business support network.

He added: “Before investing in a company, you need to understand the opportunity and in this case how the technology would work in the market. You also need to know that the people within the business can deliver and that the investor can add value and enable the business to succeed.

“This can often take a lot of time; however, Wales’ connected environment and the xénos network enabled me to approach like-minded individuals who had the necessary experience and background to help me through the process.

“We were also able to obtain Regional Selective Assistance from the Welsh Assembly Government and further commercial funding via Finance Wales plc and HSBC bank.”

Confident that he has managed to identify the winning investment formula, Mr Andrews is now keen for others to benefit from similar investments in North Wales’ highly-skilled high-tech companies and recommends they consider the various options on offer.

Further information contact, M & M Communications on 079 5869 0659 or buzz@mandmcomms.com