The proposed investment vehicle will target residential-led and mixed-use schemes across the North of England, giving Forshaw access to institutional funding to accelerate its development pipeline.

The partners plan to establish a closed-ended fund worth up to £185m, with Forshaw taking responsibility for sourcing sites, development, construction and asset management while AND Capital leads capital raising and fund formation.

The fund will back build-to-sell, private rented sector and wider regeneration projects, with Forshaw also planning to expand into larger high rise residential schemes and hotels.

Forshaw chief executive Lyndon Forshaw described the agreement as a “transformational moment” for the business.

He said: “We have built a strong track record as an SME developer, but access to funding remains one of the biggest challenges facing businesses in our sector.

“With AND Capital’s support, we will be able to significantly increase both the scale and number of projects we deliver, while expanding into new asset classes.”

The agreement is currently non-binding, with the parties expected to negotiate the final fund structure and complete due diligence over the coming months before launching the investment vehicle.

Present Forshaw projects include a £64m residential tower in Manchester, being built by contractor Domis, and a complex of over 800 flats in Salford called Riverside Place passing through planning.