A group of leading UK venture capital funds managing more than £25bn have signed an agreement backed by the chancellor, Jeremy Hunt, to boost investment in high growth companies across the country.
In a government drive to drum up private investment in Britain before the chancellor’s autumn statement, Hunt said the scheme involving 20 of the UK’s largest funds was a “huge win” for the country.
Signatories include SV Health Investors, run by the former head of the vaccines taskforce Kate Bingham, and Northern Gritstone, the investment fund chaired by the former Goldman Sachs chief economist Jim O’Neill.
Known as the “venture capital investment compact”, the pledge, which is voluntary, aims to strengthen partnership between venture capital funds and the pensions industry to boost investment in fast-growing UK companies.
Hunt said: “This compact is a huge win – demonstrating that our world-renowned venture capital firms stand ready to help our pension providers allocate funding to our high growth companies.”
Under the industry-led initiative firms will work with pension funds to identify and create more attractive investment opportunities in the private market, and take advantage of pension reforms announced by Hunt this summer.
The British Private Equity and Venture Capital Association, which spearheaded the compact, is hoping that formal cooperation will convince pension funds to become limited partners in funds they manage and advise.
The Treasury will host a roundtable to mark the compact on Tuesday. It is part of the chancellor’s Mansion House reforms announced earlier this year to unlock billions of pounds of investment from the UK pensions industry to help fund fast-growing companies.
Those reforms were announced in July and the UK’s largest pension fund managers – including Aviva, Scottish Widows and Legal & General – committed to investing 5% of assets from default pension funds in private ventures, including infrastructure and high-growth companies.
The initiative plays into wider plans to boost investment in homegrown tech and life sciences firms to help the UK compete with Silicon Valley. Britain has consistently ranked near the bottom of the G7 in recent years for all sources of private investment in the economy.
The announcement came a day after the Treasury held a separate roundtable with infrastructure investors on Monday to discuss “opportunities and challenges” they were facing, ahead of the autumn statement on 22 November. Hunt is expected to discuss the venture capital compact during a pensions summit hosted by the City of London on Wednesday.
The Treasury said officials used the meeting to emphasised that the government remained committed to “maintaining and strengthening the UK’s position as a leading global location for private investors in infrastructure”. That was despite recent decisions to scrap the northern leg of the high speed rail project, HS2.
