Written Statement: Wales Flexible Investment Fund — Extension and Capital Recycling

The Wales Flexible Investment Fund plays a central role in ensuring that businesses across Wales can access the capital they need to start, strengthen and grow. By extending the fund’s recycling period, we are enabling the Development Bank of Wales to continue providing stable, predictable finance for customers - supporting investment decisions, safeguarding jobs and helping firms navigate challenging economic conditions. This approach reinforces the Development Bank’s core mission: to increase the supply of finance to Welsh businesses and to deliver long‑term value for the Welsh economy.

Building on recommendations from the mid‑term review of the Wales Flexible Investment Fund (WFIF), I have therefore agreed that capital allocated to the Development Bank of Wales for fund delivery can be recycled to enable more investment into Welsh businesses over a longer timeframe.

This decision completes work that was clearly set out in the Development Bank’s 2021 Remit Letter, which required a mid‑term review in 2025–26 to inform decisions on recycling. The review has now concluded, as scheduled, and provides the evidence base for action. It also follows confirmation from HM Treasury earlier this year that no budgetary solution would be offered to address the impacts of the Bank’s reclassification on Welsh Government budgets. In that context, extending recycling is a proportionate and efficient way to maintain access to finance for Welsh businesses delivery while maximising value for money from public capital.

Specifically, I have taken decisions to:

• extend the recycling of Financial Transaction capital across the full 25‑year period available to Welsh Government;
• extend the repayment profile of general capital allocated to the fund, facilitating recycling of capital over time; and
• introduce a four‑year review cycle so each incoming Welsh Government can assess ongoing benefit of the fund’s delivery.

The mid‑term review confirms the fund is performing strongly: low default rates, high job creation, and significant leverage of private capital. Since inception, WFIF has invested nearly £260 million, supported more than 11,500 jobs created or safeguarded, and maintains a forecast of 100% capital repayment. Extending its recycling capacity allows us to maintain that momentum and ensure the fund can operate on a sustainable basis over the medium term.

This is about good financial stewardship—making sure capital already invested continues to work for Welsh businesses. Providing stable and predictable access to finance safeguards the Development Bank’s core offer, supports business confidence, and underpins longer‑term investment decisions across the economy. Reviews every four years will ensure transparency, accountability and alignment with future programme priorities.