Yorkshire businesses should be making investment plans for next year despite of bleak near-term economic predictions, the boss of regional investor Mercia Asset Management has said.

Mark Payton, chief executive officer of the company which supports high-growth SMEs and has £979m worth of assets under management, made the comments as his own firm announced it was buying Birmingham firm Frontier Development Capital Limited for £9.5m plus net cash.

Mercia also announced interim results for the six months to the end of September showing an adjusted operating profit of £3.6m, up from £2.4m in the previous six months.

More recent investments include support for Nova Pangaea, a firm which has announced plans to build a new plant in Teesside that will help develop sustainable aviation fuel.

Mark Payton has given an upbeat assessment of business prospects in the medium-term.

Mr Payton said there are good grounds for optimism for regional companies in the medium-term.

“I want to add the voice of optimism because I’m very aware that the press is focused on 2023 and the negativity of it all but of course 2024 and onwards should be a positive thing,” he said.

"You could argue that 2023 is the time to invest in your business for growth in 2024.

"Be it debt, be it private equity, be it venture, you should look for capital. If people come to Mercia, we will support you in your growth aspirations going forward.

"I would say to people, look at next year to plan for growth into 2024 rather than looking at next year as a time of economic doom.”

He said Mercia has taken this approach itself with its purchase of Frontier Development Capital, which is a regionally-focused lender to SMEs.

While Mercia typically provides commercial loans of between £200,000 and £1m, FDC’s are focused in the £2m and above range.

Mr Payton said: “There’s no overlapping portfolio which means we have a great fit between two different teams out in the market looking at different transactions against their fund remit but sharing deal flow.”

He said another benefit of the move for Mercia, which handles around 40 per cent of the British Business Bank’s regional funds, will be to give it a greater presence in the Midlands.

Mr Payton said his firm is in a strong position despite the challenging macroeconomic picture. "Probably a quarter of our assets under management are cash. We have a very strong balance sheet and that famous saying that ‘cash is king’ has never been more true as liquidity dries up around the market.”

Sue Summers, FDC chief executive, said: “Mercia has long been a business we’ve admired. Our shared passion for helping some of the UK’s most exciting SMEs to thrive through supportive capital, makes Mercia the natural partner of choice as we look to continue the growth we have experienced since launching in 2016. Furthermore, Mercia’s reputation and reach will be highly additive to both our future fundraising efforts and identification of potential lending opportunities.”

Yorkshire firms should invest for growth in 2023, says Mercia Asset Management boss after own £9.5m buy