The British Business Bank today announced a Call for Proposals as part of the launch of the government’s Long-term Investment for Technology and Science (LIFTS) initiative. It seeks proposals from industry for the establishment of new funds or investment structures to crowd in UK institutional investment, particularly Defined Contribution (DC) pension schemes, to support the growth and ambitions of the UK’s most innovative science and technology companies.
An initial government-funded commitment of up to £250m is expected to be available to support one or more successful proposals in mobilising institutional investment into the UK’s science and technology companies. The Bank now invites managed fund proposals from DC pension schemes (or consortia) and from authorised asset managers which have at least one UK DC pension scheme willing to support the proposal by investing.
Louis Taylor, CEO, British Business Bank, said: “LIFTS is an important initiative, with the potential to unlock billions of pounds of additional investment for the UK’s fastest growing science and technology companies, while also enabling the UK’s pension savers to benefit from the value created by UK innovation. The Bank looks forward to receiving a range of proposals, and to supporting government with its wider package of ambitious measures to unlock DC pension investment into innovative firms.’’
UK DC pension schemes currently hold more than £500bn of assets, a figure that is set to double to £1 trillion by 2030. Currently, UK schemes are under-invested in venture capital and growth equity in comparison to overseas schemes such as in Canada and Australia, despite the potential to enhance returns for their members and diversify their portfolios.
The LIFTS initiative aims to achieve three objectives that will support the long-term and sustainable growth of the UK economy:
• Unlock UK institutional investment - catalyse more investments from UK DC pension funds into venture and growth equity in a sustainable manner so as to increase the supply of domestic sources of capital for productive investment and increase access to potentially higher returning assets for UK savers. Institutions that are both able to invest at scale and take a long-term view to investment, such as the numerous DC pension schemes that are accruing assets due to automatic enrolment, are uniquely positioned to provide stable, patient capital to parts of the economy that require intensive or long-term capital provision. The outcome will be to support the UK’s innovative businesses to accelerate their growth while delivering potentially higher returns for pension scheme members.
• Catalyse private investment into UK science and technology - increase the supply of capital to UK science and technology scale-ups at the later stages. The UK has a wealth of science and technology businesses, which could offer valuable investment opportunities for UK savers. In addition, the Bank and others have identified a funding gap for R&D-intensive businesses seeking significant rounds of capital to scale up and accelerate their growth. We want to enable DC pension funds to participate in these investments, providing potential benefits to their members and enabling these businesses to access the scale-up capital they need.
• Stimulate the UK VC ecosystem - sustainably increase deal flow, develop the domestic venture landscape, nurture investment and entrepreneurial talent, and attract the best international players to the UK to enable high-potential UK businesses to scale and stay here.
The British Business Bank welcomes proposals from applicants that are able to meet the objectives and satisfy the assessment criteria set out in the Call for Proposals. Respondents are encouraged to propose collaborative approaches through consortia of institutions where this is appropriate. All proposals must be managed proposals.
Full details of the call for proposals and the submission process are published on the British Business Bank website: https://www.british-business-bank.co.uk/ourpartners/long-term-investment-technology-science/
The deadline for applications is 15:00 Friday 28 July 2023.
Dates and timelines for the LIFTS assessment process are subject to change, and applicants will be informed about any amendments. In particular British Business Bank may extend the closing date if it considers that there has been an insufficient number of viable proposals.