Levelling up and investment: opportunities for towns
Wayne Butcher, real estate and assets lead at major financial services firm Grant Thornton, works on large investments and challenging projects that make a difference to people’s lives with tangible outcomes.
Over the last two years Wayne has helped Towns to secure private funding and finance through the Towns Fund Delivery Partner (TFDP) Attracting Investment support programme . He talks us through the changes he’s seeing, and what the Levelling Up agenda means for Towns attracting investment during times of economic uncertainty. Wayne also recently wrote about ‘Humanising Investment’ which can be found here.
The Levelling Up agenda is key to progressing social change and reducing economic inequality. Levelling Up is changing the relationship in terms of how Towns and Local Authorities attract investment. In turn, this is re-shaping the relationship between the public and private sectors which are increasingly partnering in new ways and places across the UK.
Attracting investment is about more than getting money in and out of the door. The main challenge is unlocking private sector capital so Towns can ‘Level Up’ successfully, and those living there can see a substantial change and benefit in their lives. The key to unlocking investment is understanding and embracing the private sector.
Levelling Up does not mean the state replacing the private sector or vice versa, but working in collaboration. Levelling Up is a catalyst for investment, and attracting investment is an integral part of this. When private capital comes together with public sector funding, it unlocks projects which would typically stall. The private sector maximises the value of public sector contributions, especially when projects are seeking to address market failure and historical socio-economic imbalances.
My key takeaway is to trust the private sector by securing the right investors. Build relationships that work for you, with investors who know what your place is about and what you are trying to achieve. It is a matchmaking process. There is still a tendency among Towns, and projects which may be new to third-party investment, to look towards the public sector to underwrite financial risks in unproven markets.
My best advice is to do your homework on investors and understand their values and strategic aims. It is like preparing for a job interview. For example, you shouldn’t be asking sovereign wealth or pension funds for what they see as spare change!
Towns need to be nimble and understand the private sector as a strategic ally in progressing projects and providing capital through a range of sources, as opposed to the cautious approach of the past.
It may sound obvious, but there is a need to ‘shout’ about what your Town is doing. There is wide pool of capital to be deployed, but with lots of Towns and projects seeking investment, competition is stiff. You must know your brand and be authentic.
During times of economic uncertainty and high inflation, it is tough to attract private sector investment. There are also pressures on supply chains and the struggles of fixing prices where there is volatility in the market. There can be a knee-jerk reaction from project owners to try and solve problems in isolation. You need to avoid this. When creating a true partnership, problem sharing, transparency and honesty must be at the forefront of the relationship.
Sharing knowledge when it becomes available is fundamental, as is using shared expertise to understand how issues can be resolved. Private sector investors have lots of experience so are alert to the need to value engineer and provide more funding where a structured approach is needed to mitigate risk. I re-iterate… nobody wants a surprise!
Every interaction is an opportunity to tell your Town’s story, present your place-shaping strategy and ultimately build trusted relationships. Given that you never know when these relationships may need to be tested, you need to showcase social and environmental credentials, whilst offering a ‘no-surprise’ approach.
Levelling Up has made investment human; people buy from people. Be confident and proud of your Town so you can find the right investor for you – and ask questions: investment is a two-way street so there needs to be a natural fit. There are huge opportunities out there for you; attracting investment will help accelerate that journey towards local growth and shared prosperity.