Three UK pension funds have agreed to invest in the UK venture capital (VC) market via a fund coordinated by the British Business Bank.
The government has been encouraging pension funds to direct their considerable capital away from traditional cautious investments and towards high-potential, riskier VC opportunities as a way to increase the flow of funds towards businesses.
British Business Bank confirmed on Wednesday that the British Growth Partnership Fund I has achieved a first close of £200m that included commitments from pension funds Aegon UK, Cushon Master Trust and M&G.
For Cushon, owned by NatWest, and Aegon UK, this marks the first investments into UK VC.
It is also the first time that the bank has raised external capital from multiple investors and has secured commitments from three large defined contribution schemes and master trusts.
“This is a defining moment for the Bank and is a major step forward in mobilising UK pension fund capital into venture,” said chief executive Louis Taylor.
“The UK has the world’s third largest venture capital market, yet pension fund capital has historically been deeply underrepresented.
“To maximise the value of great British innovation, we must bridge the gap between the UK’s large domestic savings pool and our fast-growing companies.”
The first investment to be made via the British Growth Partnership Fund I will be an £8m injection into Wayve, the London-based autonomous driving software company valued at $8.6bn.