British Patient Capital, the £2.5 billion investment initiative of British Business Bank to coinvest with venture capital funds, could float on the stock exchange within a decade.
British Business Bank has identified the lack of pension fund investment in scaling UK companies as a brake on growth.
Converting British Patient Capital into an investable fund could invest open up the market to institutional investors.
The US has twice what British Business Bank calls the “equity intensity” of the UK – institutional investors putting money into British growth businesses.
Typically, a US growth company will get one more round of funding than its British equivalent and those rounds of funding will also be higher. By the time you get to the later stages of funding on the UK side – Series C, D, E – it’s disappeared completely, while the institutional appetite is still there in America.
Keith Morgan, CEO of British Business Bank, said: “There’s a relative lack of institutional investment in this area. The focus on growing the venture capital sector of this country is really important.”
British Patient Capital, launched in June 2018, plans to support £7.5 billion of investment in innovative British companies through its £2.5 billion investment programme over the next decade.
It has been seeded with £400 million of existing and approved venture and growth fund commitments made by British Business Bank.
BPC plans to invest between £300-350 million each year in venture and growth capital funds, including Balderton Capital, IQ Capital and Seedcamp.
Morgan said: “Over time, BPC will demonstrate this is an attractive part of the market to invest in. At a point in the future, we will move BPC to the private sector. If you have an attractive portfolio of investments, you could even list it. It could be listing it, or it could be selling it. There are different ways of bringing in private sector investing. Crucially, you are looking at creating a new platform where private investors could invest alongside.”
Read our Growth Business Q&A with Keith Morgan here