The British Business Bank is seeking ideas to support the government’s newly launched initiative for long-term investment in technology and science.
The Long-term Investment For Technology and Science (LIFTS) initiative aims to establish new investment vehicles to crowd-in investment from institutional investors, particularly defined contribution (DC) pension funds, to the UK’s most innovative science and technology companies.
The LIFTS initiative has launched a call for proposals, offering £250 million of government support to drive the creation of new investment vehicles for pension schemes. This will not only benefit the retirement incomes of UK pension savers but also boost the growth of vital sectors such as Life Sciences.
A £650million ‘war-chest’ to fire up the UK’s life sciences sector and drive forward the government’s priority to grow the economy was also unveiled by the Chancellor of the Exchequer Jeremy Hunt.
Louis Taylor, CEO of the British Business Bank, highlighted the significance of the LIFTS initiative, stating: “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.’’
Unlocking UK institutional investment
UK DC pension schemes presently oversee assets that exceed £500billion, with projections indicating a doubling of this amount to £1trillion by 2030.
However, compared to their counterparts in Canada and Australia, UK schemes have made relatively lower investments in venture capital and growth equity.
Increasing investments in these areas has the potential to generate higher returns for pension scheme members and provide portfolio diversification.
Objectives of the LIFTS Initiative
The LIFTS initiative aims to accomplish three crucial objectives in order to fuel the long-term and sustainable growth of the UK economy:
- Unlock investment: The goal is to stimulate greater investments from UK DC pension funds into venture and growth equity, thereby increasing the availability of domestic capital for productive investment. Institutions capable of making large-scale investments and taking a long-term approach, such as DC pension schemes resulting from automatic enrollment, are well-positioned to provide stable and patient capital to sectors requiring intensive or long-term funding. This approach will accelerate the growth of innovative businesses in the UK while potentially delivering higher returns for pension scheme members.
- Catalyse private investment in UK science and technology: The LIFTS initiative aims to enhance the flow of capital to UK science and technology scale-ups, particularly at later stages. The UK is home to numerous science and technology businesses that offer attractive investment opportunities for UK savers. Additionally, there is a funding gap for research and development (R&D)-intensive businesses seeking substantial capital to scale up and accelerate their growth. Enabling DC pension funds to participate in these investments will benefit their members and provide vital scale-up capital for these businesses.
- Stimulate the UK venture capital ecosystem: The LIFTS initiative seeks to sustainably increase deal flow, develop the domestic venture landscape, nurture investment and entrepreneurial talent, and attract top international players to the UK. This approach will foster an environment where high-potential UK businesses can scale and thrive.
The British Business Bank invites proposals that align with the objectives and meet the assessment criteria specified in the ‘Call for Proposals’. The deadline for applications is 15:00 on Friday 28 July 2023.