The British Business Bank will establish a ‘British Growth Partnership’ to attract UK pension fund investment into UK venture capital, with a cornerstone investment from the government. The announcement was made on Monday as the government also said the UK Infrastructure Bank would become the National Wealth Fund and receive £1.5bn less than initially promised.  

The British Growth Partnership was announced by chancellor Rachel Reeves and business and trade secretary Jonathan Reynolds during the government’s flagship International Investment Summit on Monday and is subject to regulatory approval.  

The BBB said the new vehicle will invest in the “fastest growing, most innovative” companies in the UK and drive economic growth. Over the coming months, it will “seek to raise hundreds of millions of pounds of investment for this model, with the aim of making investments by the second half of 2025”, the bank said. 

“By unlocking hundreds of millions of pounds of domestic investment for the UK’s high growth businesses through the creation of the British Growth Partnership, the UK can capture the full commercial potential of its world class breakthrough technology companies, providing a legacy for future generations of pensioners,” said the BBB’s chief executive Louis Taylor, who will be speaking at the Pensions and Lifetime Savings Association’s annual conference this week. 

The economic development bank says it is the UK’s largest domestic investor in venture and venture growth capital and the most active late-stage investor in UK life sciences and deeptech.  

The new British Growth Partnership was welcomed by representatives of the asset management and start-up sectors.  

M&G’s chair Edward Braham said it "should unlock much needed investment into the UK’s high growth innovative businesses. The combination of private and public sector partnerships, underpinned by long term patient capital, is essential to create the conditions for sustainable growth.”  

Michael Moore, chief executive of the BVCA said: “It is extremely welcome that the government and the British Business Bank have brought this hugely significant programme forwards so quickly."  

He added: “Just 3% of the pensions investment into UK led growth equity and venture capital funds is from UK pension funds. Alongside the government’s pensions review, this major new vehicle can be the start of a major shift that sees UK pensions savers get the improved retirement income that can come from backing funds which deliver active ownership and long-term investment in business.” 

As well as setting up the British Growth Partnership, the BBB’s £7.9bn commercial programmes will be put on a permanent base, which the state-owned bank said will allow it to flexibly reinvest its returns over the long term.   

The reforms are made as the BBB expects the Long-term Investment for Technology and Science programme to start late this year, having awarded £150m to asset manager Schroders, £100m to alternatives manager ICG to “create two new investment vehicles that are accessible to pension fund and other institutional investment”. Both are expected to start making investments later this year.  

This will be supported by £250m of pension investment from Phoenix Group.  

“Together these investments are expected to generate over a billion pounds of investment into UK science and technology companies. UK savers will be able to benefit from the potential returns and investment diversification that these innovative sectors can provide, whilst also backing homegrown businesses,” the BBB argued.  

The news comes as the UK Infrastructure Bank is set to be rebranded as the National Wealth Fund, with government funding of £5.8bn for green investments instead of £7.3bn, although the government has reportedly said that the remaining £1.5bn will be used for similar projects elsewhere.