The British Business Bank has successfully finalized its £250 million investment in partnership with Phoenix Group and Schroders Capital through the Long-Term Investment for Technology and Science (LIFTS) initiative. This groundbreaking program aims to establish an investment vehicle tailored for pension funds and institutional investors, facilitating capital flow into late-stage UK companies that focus on technology and science.
Creation of a £500 Million Investment Vehicle
The £250 million commitment from the British Business Bank is set to be matched by an equal amount from Phoenix Group, the UK’s leading long-term savings and retirement organization. This collaboration results in a substantial £500 million investment vehicle, managed through Phoenix’s new private markets joint venture with Schroders, known as Future Growth Capital.
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Launch of the Long-Term Asset Fund (LTAF)
After receiving regulatory approval from the UK’s Financial Conduct Authority (FCA) in September, Schroders Capital plans to launch the inaugural Long-Term Asset Fund (LTAF) specifically dedicated to UK venture capital. With investment activities expected to begin by year-end, the LTAF will offer institutional investors, including defined contribution pension schemes, valuable opportunities to back transformative UK companies.
Targeting Technology and Science Sectors
The LTAF is set to concentrate on late-stage UK businesses operating in innovative sectors, such as life sciences, artificial intelligence, quantum computing, fintech, cybersecurity, and oncology. Importantly, 20% of the fund will be allocated to life sciences, underscoring the UK’s prominent role in this critical area.
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Enhancing Support for Life Sciences
This initiative builds on the British Business Bank’s commitment to supporting the UK life sciences sector, complementing its existing £200 million Life Sciences Investment Programme and the £425 million Future Fund: Breakthrough programme. Both programs, aimed at research and development-intensive businesses in deep tech and life sciences, were recently expanded by the Chancellor in the Autumn Budget.
Insights from Industry Leaders
Louis Taylor, CEO of the British Business Bank, emphasized the transformative potential of the LIFTS initiative:
“LIFTS is a potentially game-changing initiative that aims to catalyse over £1 billion of funding from diverse sources, including UK pension funds. This investment will foster the growth of the UK’s most innovative science and technology companies, positioning them as global leaders.”
Andy Briggs, CEO of Phoenix Group, highlighted the advantages for pension savers:
“Typically, UK pension savers experience lower returns compared to their peers in Australia and Canada due to limited access to private market assets. This £250 million investment will deliver stable, long-term capital to innovative UK businesses, providing our customers with improved access to higher-return opportunities.”
Georg Wunderlin, CEO of Schroders Capital, outlined the benefits of the LTAF structure:
“The LTAF broadens access for a wider range of investors, allowing pension savers to capitalize on the growth potential of innovative UK companies while driving essential investment in key growth sectors.”
Impact on UK Science and Technology
The combined investments from the British Business Bank and Phoenix Group are projected to generate over £1 billion for UK science and technology businesses. This initiative not only promotes homegrown innovation but also enables UK savers to achieve diversification and favorable returns from vibrant, rapidly growing sectors.
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Advantages of the LTAF Structure
LTAFs are specifically designed for investors with a long-term outlook, enabling them to invest in less liquid assets. By leveraging private markets, these vehicles provide strong returns and diversification opportunities, making them an attractive choice for institutional and pension fund investors.
Key Investment Areas
Schroders Capital will focus on companies that are leading advancements in:
- Life Sciences: Emphasizing oncology and medical innovations.
- Artificial Intelligence and Quantum Computing: Pioneering future technologies.
- Fintech and Cybersecurity: Revolutionizing digital financial solutions and security measures.
This landmark collaboration among the British Business Bank, Phoenix Group, and Schroders Capital is poised to significantly enhance funding for the UK’s most innovative companies. By cultivating a supportive ecosystem for pioneering science and technology, the LIFTS initiative is set to reinforce the UK’s status as a global leader in innovation.