One of the most common criticisms levelled at Government in Northern Ireland in recent years is its relative ineffectiveness in helping local companies become public companies and indeed global companies.
The allegation is often made that the processes to access funding for businesses are too complicated and too slow. Successful business leaders identify opportunities and look to execute them as quickly and as profitably as possible.
While DETI and Invest NI have put a great deal of effort into developing the private sector, they don’t appear to have any capacity to help firms access global capital markets. The result is that too many local businesses spend more and more time learning “proprietary” skills such as building grant applications, rather than focussing on accessing the global business capital raising infrastructure – a relatively infinite pool of funding and two hundred years of financial and operational best practice.
I believe in Northern Ireland we have some of the most talented and highly motivated people in the world. We have some great home grown businesses but the truth is – we should have far more. More importantly, businesses with the potential to go public, to grow significantly and export goods and services beyond Northern Ireland need to be able to speak to people with the commercial experience and financial connections to help them achieve their goals.
Lough Shore Investments aims to provide the ultimate route to funding and to angel investor support that these businesses need. Our mission is to invest in high potential management teams and partner with them to build great businesses. Our goal is to bring ten great companies to exit or IPO by 2025.
Everyone can see that Northern Ireland’s historical performance in building major publicly owned business is poor. The table below is analysis based on data from the LSE and AIM markets at the end of November 2010. It looks at the number of registered companies per region and combined market cap of those companies. It then factors in the relative population of each region to come up with a normalized relative per capita contribution to the total value of firms on the exchange (click the table for an enlarged image).
Obviously this is a crude indicator of regional business maturity, though it more than serves to illustrate the point. Northern Ireland is a far distant last place when it comes to participation in the global markets; firstly in absolute terms, but also much more alarmingly in terms of the relative contribution per capita, which is only 1/500th the national average, 1/40th that across the border in the Republic of Ireland, and 1/9th that of the next worst region in the UK. The numbers are blisteringly bad.
Anecdotally, our sense is also that the gap between the private sector in Northern Ireland and the rest of the UK is probably diverging at present, with NI falling further and further behind. Obviously these numbers represent a gross failure of regional development policy. There is no way being in last place after thirty years, and continuing to fall further behind, can be described as anything other than abject failure.
But out of every problem can be found opportunity.
At Lough Shore we take the view that while there are undoubtedly issues with regional development policy, Northern Ireland has great people, some great companies, a great education system, mobility engrained in the culture, and an abundance of talent and entrepreneurial spirit.
Geographically and culturally we’re in a great spot to serve a number of markets – the US East Coast, Republic of Ireland, UK and Europe. There is nothing to stop us being one of the leading regions in the UK if we put our minds to it.
The benefit of having such a low starting position is that even reverting to the mean has lots of upside potential. For example, if we were to increase our relative contribution per capita on the LSE to be on a par with the Republic of Ireland at £7,409, that would equate growing the combined market cap of our home grown Plcs to £12.45 billion. For me, a better goal would be to set a fifteen year target to get ahead of North East England at £11,369 per capita, so a potential sector value of £19.16 billion.
These numbers provide lots of potential upside to build a great investment company specializing in working with local companies and grooming them to go public.
Lough Shore does not plan to invest exclusively in Northern Ireland, but we do believe that some of the greatest investment opportunities to be found this decade will come from here. There is no reason why this cannot be the decade when Northern Ireland’s economy emerges as one of the strongest regional economies in Europe. Lough Shore aims to be right at the heart of it.
– Danny Moore