Two regeneration teams have been picked to manage European Union-backed regeneration funds to lend up to £700m to developers across the north-west.

Yesterday, we reported that the Evergreen Consortium, which includes the Greater Manchester Pension Fund and CB Richard Ellis, aims to create at £350m fund to invest in the Manchester region.

Now, Aviva-backed regeneration fund Igloo has also been selected to manage an identical fund to kickstart regeneration in Merseyside.

Both funds are receiving £60m of public sector money and want to raise further equity from the private sector. The EU’s European Regional Development Fund is providing £20m and the Northwest Regional Development Agency (NWDA) is providing £10m. Other public sector bodies are to match this with a further £30m.

From the private sector, the Evergreen Consortium has secured £50m from the Greater Manchester Pension Fund and an undisclosed amount from the Lancashire Pension Fund. It is in talks with Barclays bank about arranging a facility to top up the Manchester fund to £350m.

Evergreen wants to use the cash to offer loans to developers, and recycle the profits back into the fund.

Its fund is split into two pools: one for developers in Greater Manchester and another for Cheshire, Cumbria, and Lancashire. Under EU rules, most of the seed money must be fully invested by the end of 2015, which means the consortia are under pressure to spend. Manchester’s first round of financing will close by March 2011.

Such news will be welcome among developers in the north-west, after the NWDA pulled the plug on £52m of regeneration spending earlier this week.

Against the backdrop of spending cuts, developers and investors are having to innovate to make the most of small tranches of public money.

Sir Richard Leese, leader of Manchester City Council, said: “When public resources are extremely limited, it is important that we continue to deliver as many regeneration priorities as possible by unlocking new ways of finding investment.”

Sarah Whitney, head of government and infrastructure at CB Richard Ellis, said: “This is a stepping stone to creating a very significant investment fund, which plays on the government’s ’localist’ agenda.

“The plan is to expand the fund and grow it in such a way that makes investment in the north-west more attractive to the private sector. In this case, we are really sweating the public sector euro.”

Secretary of state for Communities and Local Government Eric Pickles said yesterday: “This is proof that when left to get on with it local areas will and do work together for the common good.

“This is a great example of the innovation that can be unleashed when councils and business join forces. I want to see more of this: more civic entrepreneurship, more working across old boundaries and above all, more creative use by the public sector of scarce resources.”

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