Schroders Capital today received approval to launch the first long-term asset fund (LTAF) dedicated to investing in UK venture capital.
The fund – which first sought approval from the FCA in March – will be seeded with a cornerstone investment of £300m from savings and retirement business Phoenix Group and the UK government’s British Business Bank. Each will make a starting investment of £150m.
This newly-approved LTAF is intended to offer defined contribution (DC) and other institutional investors exposure to early-stage companies in the UK, particularly in the technology and life science industries.
Most of these companies are inaccessible to investors due to their lack of liquidity – Schroders’ head of UK DC Tim Horne said the new fund will open up the diversification benefits of private markets.
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“Supporting the UK Government’s Mansion House reforms, this fund will help unlock the potential for DC schemes to invest into fast-growing, early-stage companies,” he added. “These investors have so far been underweight private markets, venture capital and UK businesses in particular.”
And with the UK being the largest venture capital market in Europe, Schroders CEO Peter Harrison said gaining access to this challenging asset class is essential for driving long-term returns and boosting UK growth.
“The UK is one of the most innovative countries in the world, punching above its weight in many sectors, including science and technology innovation. This is why it’s critical we increase investment into these sectors to develop the skills and culture that will benefit savers today and in the future,” he said.
“A UK venture and growth LTAF will act as a catalyst to unlock institutional investment, particularly from UK defined contribution pension schemes, and increase the supply of capital to UK technology and science start-ups. This initiative will ultimately strengthen UK economic growth and reinforce the UK’s position as the natural home for fast-growing companies.”
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This will be Schroders third LTAF, having launched its first, Schroders Capital Climate+, in April last year. It is dedicated to giving UK pension fund investors exposure to illiquid assets that are supporting the net zero transition.
Its second LTAF, Schroders Greencoat Global Renewables+, was launched in February this year and invests in renewable energy and transition infrastructure.
