BBB and Phoenix invest £500m into Schroders LTAF

Posted by Admin November 14, 2024 Bussiness

The British Business Bank has invested £250m into Schroders Capital’s long-term asset fund (LTAF). The BBB’s investment will be matched by Phoenix Group via its new private markets joint venture with Schroders, Future Growth Capital.

The two allocations mean that the Schroders LTAF will be seeded with £500m, with the first investments expected to be made by the end of the year.

The BBB’s £250m commitment was made through the government’s new Long-term Investment For Technology and Science (LIFTS) initiative, which aims to establish new investment vehicles to crowd-in investment from institutional investors, particularly defined contribution pension funds.

Schroders’ LTAF aims to fund the growth and development of UK late-stage companies focused on technology and science, with 20 per cent of the fund expected to be invested in life sciences.

“Long-Term Investment for Technology and Science is a potentially game-changing initiative,” said Louis Taylor, chief executive of the BBB.

“With the intention of catalysing more than £1bn of funding, including from UK pension funds, LIFTS will support the growth and ambitions of the UK’s most innovative science and technology companies, which with the right finance and support can become the world-beating businesses of tomorrow.

“We are pleased to have completed our investment with Schroders Capital, alongside Phoenix Group and Future Growth Capital, as they build towards making their first investments under the initiative by the end of this year.”

Schroders won approval from the Financial Conduct Authority in September to launch the first ever LTAF dedicated to UK venture capital.

Georg Wunderlin, chief executive of Schroders Capital, praised the LIFTS scheme, and said that the £500m investment will “encourage further domestic investment in these key growth sectors, enabling these companies to maintain their edge and continue to innovate from here in the UK.”

“The LTAF structure enables access for a wider pool of investors, allowing pension savers to benefit from the growth potential of these companies while unlocking much needed investment to continue to drive their development,” added Wunderlin.

“Furthermore, our strategic partnership with Phoenix, Future Growth Capital, supports the UK’s Mansion House Compact and will provide scale to unlock these investment opportunities in private markets and the benefits they can offer.”

“Currently pension savers in the UK receive lower returns than their counterparts in places like Australia and Canada, partly because the UK allocates much less to private market assets than equivalent countries,” said Andy Briggs, chief executive at Phoenix Group.

“This £250m investment on behalf of our customers into the UK Government’s LIFTS initiative, will provide stable patient capital to the UK’s most innovative businesses. It will help to accelerate their growth, whilst also giving our customers access to a broader range of assets with potential for higher returns.”