Interim Evaluation of Debt Funds (British Business Bank)

Summary

• Between 2013 and 2023, British Business Investments (BBI) committed a total of £1.1bn to 32 funds, which supported 363 SMEs across the UK.p.5
• BBI commitments into Debt Funds were matched by £4.2bn in private sector funding, yielding an overall private leverage ratio of 3.7.p.33
• Total commitments into DF-backed funds from public and private sources reached £5.3bn by March 2023.p.34
• From inception to March 2023, the programme generated an Internal Rate of Return (IRR) of 7.4%, accrued £114m in interest, and generated £189m in profit net of write-offs.p.32
• Econometric analysis estimated a present value of direct economic benefits of £1.8bn for the 363 beneficiaries in scope, delivering a benefit to cost ratio of 2.5.p.8

Key insights

1. BBI committed £1.1bn across 32 small-cap debt funds between 2013 and 2023, deploying capital to 363 UK-based SMEs.p.5
2. Private co-investment into the funds reached £4.2bn, indicating that every £1m committed by BBI leveraged £3.7m from private sector investors.p.33
3. The programme achieved an aggregate Internal Rate of Return of 7.4% from inception to March 2023, surpassing comparable UK private debt benchmarks.p.44
4. Total write-offs stood at just under £34m, representing 0.9% of total gross investment to March 2023.p.47
5. Econometric impact analysis suggests the programme helped beneficiaries create c.1,400 net additional jobs in total, averaging three to five jobs per company.p.7
6. Fund-level additionality was strong, with delivery partners reporting that roughly half of the funds would not have secured other capital at all without BBI's cornerstone commitment.p.7
7. The programme demonstrated strong value for money, generating £2.5 of Gross Value Added for every £1 of economic cost incurred.p.8