NEL Fund Managers Team Takes Control Through New Employee Ownership Trust

Uploaded by in NEL News on May 17, 2016

The team at regional fund management firm NEL Fund Managers has made a significant investment in its own future by taking control of the business through the formation of an Employee Ownership Trust.

Based around the John Lewis partnership model, Employee Ownership Trusts (EOTs) were created in 2012 to provide a means of encouraging employee engagement within businesses and giving them an active interest in their company’s performance.

The NEL Fund Managers EOT is thought to be one of the first to be formed in the UK since they were introduced, and will provide the 11-strong team with a greater degree of control over the direction of the business, as well as benefits from its performance.

Originally founded in 1989, NEL Fund Managers is currently responsible for the management of the Finance For Business North East Growth Fund, and has made investments in well over 100 regional businesses with a total value of more than £25m over the last six years.

A £4m extension to the Growth Fund was announced recently, and NEL is now looking to make up to 15 further investments in the coming year of between £50,000 and £400,000 in businesses right across the North East that require new capital to implement their development plans.

The formation of the NEL Employee Ownership Trust was carried out with support from the Newcastle offices of Deloitte and law firm Ward Hadaway.

Yvonne Gale, chief executive at NEL Fund Managers, says: “The positive benefits of employees having a direct interest in the businesses for which they work has long been recognised, and going down this road takes us to the start of an exciting new chapter in NEL’s ongoing story.

“We have an extremely strong and dedicated team who have helped hundreds of North East businesses achieve their own sustainable commercial success over the years, and we are now in a stronger position to shape our own future development strategy.

“Demand for the type of mezzanine funding we provide remains extremely strong as ever, and the recent £4m extension to the Growth Fund has added new momentum to our search for even more North East businesses with strong management teams and robust development plans in which we can invest.”

Gordon Rowell, Senior Tax Manager at Deloitte, adds: “In our initial discussions with the directors of NEL, the employee-focused culture of their business was clear, as was the fact that this was not a typical management buyout situation.

“The EOT structure appeared to fit perfectly with their long term aims and approval from HMRC was obtained to provide certainty that it met the requirements of the legislation.”

Katherine Hay Heddle, Corporate Partner at Ward Hadaway, led the firm’s team providing legal advice to NEL Fund Managers, supported by members of Ward Hadaway’s specialist employee benefits team.

She says: “This type of innovative company structure is really breaking new ground when it comes to giving staff a greater stake in a company’s fortunes.

“We were very pleased to be able to advise NEL Fund Managers on the formation of its Employee Ownership Trust, and we wish Yvonne and the team continued success under the new arrangements.”

Established by holding fund manager North East Finance (NEF) in 2010, the £159.5m Finance for Business North East (FBNE) programme is a suite of seven venture capital and loan funds which provide investment for start-up and growing businesses in the North East of England.  They will continue investing until 2016, and aim to support 950 companies and to create or safeguard almost 10,000 jobs.

For more information about NEL’s investment criteria, visit www.nel.co.uk or contact the investment team on 0345 369 7007.

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