The British Business Bank has finalised its £250m investment in collaboration with Phoenix Group and Schroders Capital under the Long-Term Investment for Technology and Science (LIFTS) initiative. This innovative program aims to create an investment vehicle designed for pension funds and institutional investors, facilitating investments in late-stage UK companies focused on technology and science.

Creation of a £500m Investment Vehicle

The £250m commitment from the British Business Bank will be matched by £250m of pension investment from Phoenix Group, the UK’s largest long-term savings and retirement business. This combined funding results in a £500m 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)

Following regulatory approval from the UK’s Financial Conduct Authority (FCA) in September, Schroders Capital is set to launch the first-ever Long-Term Asset Fund (LTAF) dedicated to UK venture capital. With investments expected to commence by the end of the year, the LTAF provides institutional investors, including defined contribution pension schemes, with opportunities to support groundbreaking UK companies.

Focus on Technology and Science Sectors

The LTAF will concentrate on late-stage UK businesses in innovative sectors such as life sciences, artificial intelligence, quantum computing, fintech, cybersecurity, and oncology. Notably, 20% of the fund is earmarked for life sciences, reinforcing the UK’s position as a leader in this field.

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Building on Existing Life Sciences Support

This initiative builds on the British Business Bank’s robust support for UK life sciences, complementing its £200m Life Sciences Investment Programme and £425m Future Fund: Breakthrough programme. These programs, which target research and development-intensive businesses, including those in deep tech and life sciences, were recently extended by the Chancellor in the Autumn Budget.

Statements from Key Leaders

Louis Taylor, CEO of the British Business Bank, emphasised the transformative potential of the LIFTS initiative:

“LIFTS is a potentially game-changing initiative, aiming to catalyse more than £1bn of funding from sources including UK pension funds. This investment will fuel the growth of the UK’s most innovative science and technology companies, equipping them to become global leaders.”

Andy Briggs, CEO of Phoenix Group, highlighted the benefits for pension savers:

“UK pension savers typically receive lower returns than their counterparts in countries like Australia and Canada due to limited allocations to private market assets. This £250m investment will provide stable, patient capital to innovative UK businesses, offering customers access to higher-return opportunities.”

Georg Wunderlin, CEO of Schroders Capital, outlined the advantages of the LTAF structure:

“The LTAF opens up access for a broader pool of investors, enabling pension savers to benefit from the growth potential of innovative UK companies while unlocking essential investment in key growth sectors.”

Impact on UK Science and Technology

The combined investments from the British Business Bank and Phoenix Group are expected to generate over £1bn for UK science and technology businesses. This initiative not only supports homegrown innovation but also provides UK savers with access to diversification and potential returns from dynamic and fast-growing sectors.

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Benefits of the LTAF Structure

LTAFs are designed for investors with longer-term horizons, allowing them to invest in more illiquid assets. By leveraging private markets, these vehicles offer robust returns and diversification opportunities, making them an attractive option for institutional and pension fund investors.

Key Areas of Investment

Schroders Capital will target companies pioneering advancements in:

• Life Sciences: Including oncology and medical innovation.
• Artificial Intelligence and Quantum Computing: Developing future-forward technologies.
• Fintech and Cybersecurity: Enhancing digital financial solutions and security.

This landmark collaboration between the British Business Bank, Phoenix Group, and Schroders Capital is set to significantly enhance funding for the UK’s most innovative companies. By fostering a supportive environment for groundbreaking science and technology, the LIFTS initiative paves the way for the UK to solidify its position as a global leader in innovation.