British Business Bank Responds to package of measures announced at the International Investment Summit
Louis Taylor, CEO, British Business Bank, said: “We welcome today’s announcement by the Chancellor of the Exchequer and Secretary of State for Business and Trade that the British Business Bank will establish the British Growth Partnership, subject to regulatory approval, encouraging more UK pension fund investment into the UK’s fastest growing, most innovative companies.
“These companies have the potential to drive productivity, jobs and growth, and will support the UK to be internationally competitive in the industries of the future.
“By unlocking hundreds of millions of pounds of domestic investment for the UK’s high growth businesses through the creation of the British Growth Partnership, the UK can capture the full commercial potential of its world class breakthrough technology companies, providing a legacy for future generations of pensioners.
“We also welcome the announcement to implement a set of reforms to the British Business Bank’s financial framework by putting the Bank’s £7.9bn commercial programmes on a permanent footing. This means the Bank can flexibly re-invest its investment returns over the long term to increase growth and prosperity across the UK.
“This announcement is a strong endorsement of the British Business Bank’s 10-year track record, market access and capabilities including our position as the UK’s largest domestic investor in venture and venture growth capital and the most active late-stage investor in UK life sciences and deeptech.
“Alongside this announcement, we also welcome the transformation of the UK Infrastructure Bank to become the National Wealth Fund and look forward to working in close partnership with the National Wealth Fund to deliver the Government’s missions and Industrial Strategy.”
British Growth Partnership
The British Business Bank will create a new vehicle, the British Growth Partnership, subject to regulatory approval, to crowd-in UK pension fund and other institutional investment into venture capital funds and innovative businesses, supported by a cornerstone government investment.
Investments from the fund will be made on a long term, fully commercial basis, independent of government, leveraging the Bank’s capability and market access to a range of promising high growth UK companies. Over the coming months the British Business Bank will seek to raise hundreds of millions of pounds of investment for this model, with the aim of making investments by the second half of 2025.
Reforms to the British Business Bank
Reforms to the British Business Bank’s financial framework will be implemented that will increase the Bank’s impact and increase its ability to respond flexibly to the market, including putting the Bank’s £7.9bn commercial programmes on a permanent footing.
Making the capital base of the Bank’s commercial programmes permanent will allow the Bank to re-invest its commercial returns over the long-term, catalysing more capital into UK companies. It will also allow the Bank to deploy its capital in a more flexible way using its full range of capabilities to support the Government’s missions and the delivery of its Industrial Strategy.
Long-Term Investment for Technology and Science initiative update
The British Business Bank recently awarded £250m under the Long-Term Investment for Technology and Science (LIFTS) initiative to Schroders Capital (£150m) and ICG plc (£100m) who will create two new investment vehicles that are accessible to pension fund and other institutional investment.
This will be supported by £250m of pension investment from Phoenix Group, and together 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.
Following FCA approval of Schroders Capital’s first Long-Term Asset Fund (LTAF) dedicated to UK venture capital last month, both successful LIFTS bidders, Schroders Capital and ICG plc, are expected to begin making investments via their new vehicles in late 2024
British Growth Partnership Stakeholder Quotes
Dame Julia Hoggett, CEO, London Stock Exchange Plc said: “It is critically important for the growth of the UK economy that home grown companies are able to access the investment they need to grow, scale and stay in the UK.
“Access to meaningful UK capital at the scaling phase has been a long-recognised challenge and so we are delighted that British Growth Partnership is being established to help address this problem. This will also facilitate more investment by UK pension schemes into scaling UK companies, providing greater returns for their savers and giving UK investors a greater stake in the UK economy.”
Sir Nicholas Lyons, group chair, Phoenix said: “The UK needs scale and skills to convert our brilliant science and technology start-ups and university spinouts into the successful and sustainable companies of tomorrow. British Growth Partnership will complement the private sector DC pension industry’s undertakings under the Mansion House Compact to expedite this, directing investment to deliver the best returns for our pension savers.”
Professor Sir John Bell, president, Ellison Institute of Technology said: “Making sure the best innovative British companies can access the capital they need to scale and stay in the UK is critical for the future of the economy. The Chancellor’s announcement today of the new British Growth Partnership, in addition to confirming £7.9bn of permanent capital for the British Business Bank, are both very welcome and significant steps forward in solving this problem”
Sir Jonathan Symonds CBE, non-executive chair, GSK said: “This is a welcome step; encouraging institutional investment into the UK’s high-growth-potential companies can provide a real boost to the economy and generate better returns for individuals’ pension investments”
Brent Hoberman, chairman and Co-Founder, Founders Forum Group, Founders Factory, firstminute capital said: “It’s great to see the new government taking concrete steps to amplify the Mansion House reforms. This new British Growth Partnership should help UK startups access further scale up capital to create more world leaders.”
Saul Klein, co-founder, Phoenix Court and member of the Council for Science and Technology said: “The UK has more than 750 venture backed companies generating more than $25m in revenue – this is more than France, Germany, Sweden and the Netherlands combined. These companies have created over 200,000 new jobs and continue to grow but the UK still has $35bn less scale up capital to support these companies than the United States’ Bay Area alone.
“The government’s continued support for the British Business Bank and its focus on addressing this scale up opportunity will be very much welcomed by these 750 companies as well as the cohorts coming behind them.”
Peter Harrison, group chief executive, Schroders plc said: “These are further helpful initiatives in creating an environment where risk capital can flow into strategically important industries. Every step is welcome in supporting future economic growth.”
Edward Braham, chairman, M&G said: “We welcome the creation of the British Growth Partnership which should unlock much needed investment into the UK’s high growth innovative businesses.
“The combination of private and public sector partnerships, underpinned by long term patient capital, is essential to create the conditions for sustainable growth.
“As a leading international investor, M&G has a proud history of supporting the progress of businesses and communities across the UK, investing in new innovative companies and private assets such as housing, hospitals and transport.”
Steve Bates OBE, CEO, BioIndustry Association said: “Our world-leading, innovative life sciences and biotech sector is a unique competitive advantage for economic growth. The sector attracts expert global investors but a lack of investment from UK-based institutional investors means the economic and social returns are too often lost overseas. The British Growth Partnership will help turbo-charge innovative businesses with fresh UK-based capital, enabling them to scale in the UK and deliver more returns to the British economy, and to ordinary people saving for their retirement. This is a win-win-win for UK life science businesses, for UK pension savers and for the forward-thinking financial services sector.”
Kate Bingham, managing partner, SV Health and former chair UK Vaccine Taskforce welcomed the announcements saying: “The UK has the potential to be a global leader and hub for healthcare breakthroughs with its strong entrepreneurial and academic base, together with our expertise and innovation in data science and artificial intelligence. Making the British Business Bank independent of government as well as launching the British Growth Partnership enables the Bank to catalyse institutional investment, including from pension funds, into brilliant UK companies that are supercharging the development of revolutionary medical treatments including smarter medicines for cancer, Alzheimer’s and blindness.
Dom Hallas, executive director, Startup Coalition said: “Tech startups and scaleups need a stable and improving funding environment to compete globally. The British Business Bank’s role in helping create that landscape is critical and today’s announcement will help the UK continue to build VC-backed tech companies across the country that are ready to compete with the very best.”
Michael Moore, chief executive, BVCA said: “It is extremely welcome that the government and the British Business Bank have brought this hugely significant programme forwards so quickly.
“The prize is to get significant new capital into the growth equity and venture capital funds that are creating new industries and backing innovative businesses that will be the backbone of the British economy of tomorrow. The British Business Bank has a vital role catalysing institutional investment into fast growing British businesses and this announcement will boost that work substantially.
“Just 3% of the pensions investment into UK led growth equity and venture capital funds is from UK pension funds. Alongside the government’s pensions review this major new vehicle can be the start of a major shift that sees UK pensions savers get the improved retirement income that can come from backing funds which deliver active ownership and long-term investment in business.”
Kerry Baldwin, co-founder, managing partner, IQ Capital said: The launch of the British Growth Partnership and the confirmation of a permanent capital allocation for the British Business Bank are two crucial steps forward in solving the lack of access to domestic capital for the UK’s most promising growth companies.
“I very much welcome the chancellor’s announcement today, she has been hugely engaged with the venture capital and technology sector, and champions the incredible societal impact that our sector enables through investments into innovative technologies across the UK.
“The British Business Bank has been at the heart of powering the next generation of UK venture and growth funds and the launch of the new fund is welcome as part of the pension reforms. This fund will enable access to world-leading science and innovative investments which increase productivity by transforming legacy industries through the adoption of novel technologies and also by providing growth capital to the next generation of globally leading frontier technologies which are solving pressing critical global issues from climate change to energy transition.”
Dr Andrew Williamson, managing partner, Cambridge Innovation Capital, and member of BVCA Council said: “Since its formation in 2018, British Patient Capital has played a central role in the growth of the UK’s knowledge-intensive innovation ecosystem. It has built a world leading team and investment platform with a strong track record of investing in UK deeptech and life sciences companies and the venture capital funds that support these companies.
“The British Growth Partnership will make the Bank’s extensive expertise available to a broader range of institutional investors, providing attractive returns for those investors and increasing the capital available for leading UK start-up and scale-up businesses.”
Duncan Johnson, chief executive officer, Northern Gritstone said: “We at Northern Gritstone believe that skilled partnerships that channel patient investment into long-term growth and innovation are more important than ever for the UK.
“By establishing the British Growth Partnership, the British Business Bank is creating a pathway for pension funds and institutional investors to support the future today. Through investment we can create and scale the world class businesses of tomorrow in the UK which is the platform for growth for our economy over the decades to come.”
Irene Graham OBE, CEO, ScaleUp Institute said: “The ScaleUp Institute has long evidenced the important role of development banks and Sovereign Wealth Funds to global scaleup economies. The government’s placement of the British Business Bank commercial initiatives into permanency, with greater flexibility, alongside the creation of the great British Growth Partnership are very much welcome and represent significant milestones for the UK economy.”