The British Business Bank has completed its £250m commitment to a Long-Term Investment for Technology and Science (LIFTS) initiative, which will be matched by £250m of pension investment from Phoenix Group, creating a £500m investment vehicle. Phoenix’s investment will be made through its new private markets joint venture with Schroders, Future Growth Capital.
Following approval from the UK’s Financial Conduct Authority in September to launch the first-ever Long-Term Asset Fund (LTAF) dedicated to UK venture capital, Schroders Capital, is expected to begin making investments before the end of the year.
The LTAF will offer defined contribution and other institutional investors the opportunity to participate in the growth and development of groundbreaking UK late-stage companies focused on technology and science with 20% of the fund expected to be invested in life sciences.
This investment builds further on the Bank’s support for UK life sciences through its £200m Life Sciences Investment Programme and its £425m Future Fund: Breakthrough programme which invests in Research and development (R&D) intensive companies, including in deep-tech and life sciences.
At the autumn Budget, chancellor Rachel Reeves announced that both programmes would be extended.
Schroders Capital will invest across companies that are pioneering the development of long-term innovation themes such as life sciences, artificial intelligence, quantum computing, fintech, cybersecurity and oncology.
Louis Taylor, chief executive officer of British Business Bank, said the LIFTS initiative is potentially “game-changing”.
He added that with the intention of catalysing more than £1bn of funding, including from UK pension funds, LIFTS will support the growth and ambitions of the UK’s most innovative science and technology companies, which with the right finance and support can become the world-beating businesses of tomorrow.
“We are pleased to have completed our investment with Schroders Capital, alongside Phoenix Group and Future Growth Capital, as they build towards making their first investments under the initiative by the end of this year,” he said.
Andy Briggs, CEO of Phoenix Group, added: “Currently pension savers in the UK receive lower returns than their counterparts in places like Australia and Canada, partly because the UK allocates much less to private market assets than equivalent countries.”
He pointed out that the £250m investment on behalf of Phoenix’s customers into the UK government’s LIFTS initiative, will provide stable patient capital to the UK’s most innovative businesses.
“It will help to accelerate their growth, whilst also giving our customers access to a broader range of assets with potential for higher returns,” he added.
Georg Wunderlin, Schroders Capital CEO, said: “The UK is home to some of the most innovative early-stage technology and life sciences companies in the world.
“This significant cornerstone investment from British Business Bank and Phoenix will encourage further domestic investment in these key growth sectors, enabling these companies to maintain their edge and continue to innovate from here in the UK.”
Wunderlin added that the LTAF structure enables access for a wider pool of investors, allowing pension savers to benefit from the growth potential of these companies while unlocking much needed investment to continue to drive their development.
He believes that Schroders Capital’s partnership with Phoenix and Future Growth Capital supports the UK’s Mansion House Compact and will provide scale to unlock these investment opportunities in private markets and the benefits they can offer.
Read the digital edition of IPE’s latest magazine
No comments yet