The British Business Bank has completed its £250m investment alongside Phoenix Group with Schroders Capital under the Long-Term Investment for Technology and Science (LIFTS) initiative to create a new investment vehicle that is accessible to pension funds and other institutional investors.
The British Business Bank has completed its £250m commitment to the fund, which will be matched by £250m of pension investment from Phoenix Group, the UK’s largest long-term savings and retirement business, 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, the $97.3bn specialist private markets business, 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 R&D intensive companies, including in deeptech and life sciences. At Autumn Budget, the Chancellor announced that both programmes would be extended.
Louis Taylor, CEO, British Business Bank, said:
Long-Term Investment for Technology and Science is a potentially game-changing initiative. 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.
Andy Briggs, Chief Executive Officer, Phoenix Group, commented:
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.
This £250m investment on behalf of our 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.
Georg Wunderlin, CEO, Schroders Capital, 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.
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.
Furthermore, our strategic partnership with Phoenix, 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.
These investments are expected to generate over a billion pounds of investment into UK science and technology companies. UK savers will be able to benefit from the potential returns and investment diversification that these innovative sectors can provide, whilst also backing homegrown businesses.
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.
LTAFs are vehicles designed to enable UK investors with longer-term horizons to invest in more illiquid assets, allowing them to take advantage of the robust returns and diversification benefits of private markets.
Source