By Charlie Conchie
A group of top pension and venture capital chiefs have committed to draw up plans to drive cash from the pension industry into Britain’s start-ups, as the City looks to implement a government-backed commitment signed last year.
The new ‘expert panel’, including executives from Legal & General and pension firm NEST, has been called together by the British Private Equity and Venture Capital Association (BVCA) in a bid to get retirement cash flowing into the venture capital industry.
The launch of the new group, backed by Chancellor Jeremy Hunt, follows a commitment from 10 top pension money managers last year to invest at least five per cent of their managed assets in growth companies, in the so-called Mansion House Compact.
After the deal was signed last July, around 100 venture capital firms penned a corresponding commitment to welcome potentially billions of pounds of pension money into the market.
The new panel will now look to “overcome barriers to investment in private capital funds” and forge “long-term and constructive working relationships” between venture capital firms with pension money managers.
“We will thoroughly explore how pension funds in other countries have been able to invest in UK funds successfully and get to the bottom of the technical and structural issues which hold back investment by UK pension funds in venture capital and growth equity-backed firms,” said Kerry Baldwin, chair of the panel and chief executive of the venture firm IQ Capital.
Among the other bosses on the panel are the chief executive officer of the British Growth Fund; the director general of the Association of British Insurers, and executives from the ICG, M&G and the chair of the Unilever Pension Fund.
The group is expected to report in Autumn 2024 before laying out a series of recommendations to the government, the pensions and private capital industries next Spring.
Pension cash has traditionally been shut out of start-ups due to the higher fees charged by private equity and venture capital money managers. However, both the Conservative and Labour parties have laid out plans to push pension firms to divert more cash into the market over the past year.
Ministers claim that by investing more in growth companies pension savers could pocket a boost of around £1,000 a year.
In a statement today, Chancellor Jeremy Hunt said the new panel showed there was “real momentum behind our Mansion House reforms”.
“Seeing industry leaders from our pension funds and growth investors come together to tackle the barriers to greater private investment is good for savers and good for business, and I look forward to seeing the results of the Panel’s work,” he added.
