Written question WQ88773

The Development Bank of Wales has been directed to support the Welsh Government’s aim of supporting co-operatives and employee-owned businesses via its remit letter. Specifically, it tasks the Development Bank to ‘support employee buy-outs raising awareness among businesses where funds are able to support such actions’.

The Development Bank does this via its role as a gap funder providing loans (and equity) to groups of employees which are looking to acquire a business from its owner and are unable to secure finance from the private sector. The Development Bank works closely both with Business Wales, and Employee Ownership Wales, which is delivered by Cwmpas, in helping employees understand their funding options including the benefits of Employee Ownership Trusts. They do this through providing access to specialist Investment Managers to liaise directly with employees, joint events with Cwmpas and Business Wales, as well as through ongoing promotion through case studies and a dedicated website area.

The Development Bank has directly funded directly funded 3 of the 44 employee buyouts recorded (as of Dec 22) in Wales. Furthermore, it has provided subsequent growth funding to a further 10 of these 44 businesses (£11.5m in total) after their buyout was completed through other financial support e.g. self-financed or private lending.

In addition, the Development Bank supports a range of management succession transactions. Since 2017/18 it has invested a total of £72.4m, into Welsh businesses in support of retained Welsh ownership. The Development Bank regularly discusses with, and reports to, Welsh Government it’s employee buyout and succession activity. In 2022 a review was undertaken to set in place clear information flows to monitor the Development Banks contribution to this Programme for Government objective.