Dains provide due diligence to Pure Mobile and Finance Birmingham

Deal summary

Finance Birmingham has invested a significant six figure sum into Northampton-based Pure Mobile. Pure Mobile, a communications and IT services business, plans to rebrand and restructure, which will involve opening a new office and creating 15 new jobs in Birmingham.

Birmingham City Council has become the first local authority in the UK to take an equity stake in a company as part of plans to boost lending in the region. The city council has taken a minority stake in telecommunications firm Pure Mobile to fund plans to re-brand and restructure. The move will create 15 jobs in Birmingham.

The undisclosed investment, understood to be worth almost £1 million, is believed to be the first instance of a council taking equity in a company for commercial reasons, and is part of wider plans to create employment and value in the West Midlands. The move has been welcomed by business leaders as a means of stimulating desperately-needed investment into Midland SMEs but the Taxpayers' Alliance has argued it is not for councils to decide where such funding goes.

Sue Summers, chief executive of Finance Birmingham, said the equity deal was "the first of many", with more than £10 million worth of loans and equity deals in the pipeline. "Finance Birmingham was founded to deliver innovative funding solutions and access to finance for SMEs. We started with a loan fund, and there is also an equity fund as well."

The council launched a £10 million business loan fund through Finance Birmingham in January 2010, and a separate equity fund, which offers between £250,000 and £1 million, was later added. Ms Summers said there was just under £7 million invested – assisting 25 companies in safeguarding and creating around 900 jobs – and plans to "retain that momentum".

The operation currently has between £10 million and £12 million worth of loans and equity deals in the pipeline.

While funding opportunities are judged in terms of the economic benefit to the region, Finance Birmingham investment director John Handley said the investment is part of a new wave of public sector business support approached from a commercial standpoint.

He said: "Before, these things have been done too much from a grant mindset in the public sector, where they don't expect to get their money back. "The council is saying 'we are going to support SMEs but we are going to do it on a commercial basis'."

Due diligence was provided by Roy Farmer and Rob Wilson from Dains.

What our client said

Gavin Tedstone – Business Principal, Pure Business Services said "Having used Dains previously, I insisted on using you again and I was not disappointed. Your commitment to customer experience, combined with your passion and excellent service ensured that the due diligence was completed in a very short time frame with minimum disruption to our business. The investors were delighted with the report which highlighted clearly your understanding of our business. I would have no hesitation in recommending you and I look forward to doing business with Dains again soon."

What we said

The Dains Corporate Finance team said "We were excited to work with Pure and Finance Birmingham in what looks to be an exciting and cutting edge financial development for the region. We were also glad to see that Gavin came straight to us when he required assistance as this proves quite clearly that the relationships that we endeavour to create are for the long term."

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