Key Takeaways
- • A consortium of major UK pension providers is exploring a vehicle of more than £1bn to back high-growth British science and technology companies, according to the primary source.
- • The fund would bring together pension investors with the British Business Bank and the Office for Investment to connect institutional capital with founders and venture managers.
- • UK Private Capital's "Report on Investment Activity 2025" found British private capital received 16.5 times more foreign investment than domestic investment.
- • More than three-quarters of UK equity deals above £50mn in 2020-25 involved at least one overseas investor, representing over 80 per cent of total deal value in that segment.
- • ABI data shows only 0.6 per cent of DC default funds were invested in unlisted equities as of February 2025, well behind global peers and the Mansion House Compact targets for 2030.
Summary
A consortium of major pension providers is exploring a UK scale-up fund of more than £1bn to back high-growth British science and technology companies. The initiative would bring together major pension investors with the British Business Bank and the Office for Investment. The article, written by Michael Moore, chief executive of UK Private Capital (formerly the BVCA), presents the vehicle as a meaningful signal that domestic capital can play a larger role in closing the scale-up gap, as UK businesses in sectors such as life sciences, software, clean technology and advanced manufacturing often find deeper capital available overseas. The article notes that details of the fund remain to be settled.
The article cites data from UK Private Capital's "Report on Investment Activity 2025", which found British private capital received 16.5 times more foreign investment than domestic investment. According to the organisation's research, more than three-quarters of equity deals above £50mn in 2020-25 involved at least one overseas investor, representing over 80 per cent of total deal value in that segment. Moore argues that the UK pension system holds trillions of pounds of long-term capital yet invests little in private assets, which limits scale-up capital compared with the US or parts of Asia.
Progress under the Mansion House agenda, which through the Compact and Accord commits pension funds to significantly increasing unlisted equity investment by 2030, is described as slow. ABI data cited in the article shows only 0.6 per cent of DC default funds were invested in unlisted equities as of February 2025. In a survey of its members in May, UK Private Capital identified only two legally binding commitments to VC funds by UK DC default funds aligned with the Compact. Almost half of respondents were not optimistic that Mansion House agreements would deliver greater investment by 2030, compared with 20 per cent who were optimistic.
Moore points to returns as a further reason for change, citing 15.8 per cent annualised over a 10-year horizon for overseas investors, compared with 6.2 per cent for the FTSE All Share and 8 per cent for the MSCI Europe Index. He concludes that the proposed fund may signal the pensions industry is becoming more serious about increasing domestic investment, and that more institutions will need to follow if the UK is to retain the growth and returns generated by its venture and growth ecosystem.
The article cites data from UK Private Capital's "Report on Investment Activity 2025", which found British private capital received 16.5 times more foreign investment than domestic investment. According to the organisation's research, more than three-quarters of equity deals above £50mn in 2020-25 involved at least one overseas investor, representing over 80 per cent of total deal value in that segment. Moore argues that the UK pension system holds trillions of pounds of long-term capital yet invests little in private assets, which limits scale-up capital compared with the US or parts of Asia.
Progress under the Mansion House agenda, which through the Compact and Accord commits pension funds to significantly increasing unlisted equity investment by 2030, is described as slow. ABI data cited in the article shows only 0.6 per cent of DC default funds were invested in unlisted equities as of February 2025. In a survey of its members in May, UK Private Capital identified only two legally binding commitments to VC funds by UK DC default funds aligned with the Compact. Almost half of respondents were not optimistic that Mansion House agreements would deliver greater investment by 2030, compared with 20 per cent who were optimistic.
Moore points to returns as a further reason for change, citing 15.8 per cent annualised over a 10-year horizon for overseas investors, compared with 6.2 per cent for the FTSE All Share and 8 per cent for the MSCI Europe Index. He concludes that the proposed fund may signal the pensions industry is becoming more serious about increasing domestic investment, and that more institutions will need to follow if the UK is to retain the growth and returns generated by its venture and growth ecosystem.
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