Backing for Venture Capital Investment Compact grows

A further 50 of the UK’s venture capital and growth equity firms have now signed the Venture Capital Investment Compact, pledging to support efforts to unlock British pension investment in high-growth companies.

The compact was launched by the British Private Equity and Venture Capital Association (BVCA) last month, in an effort to unlock greater defined contribution (DC) pension investment in high-growth companies.

It was designed to build on the Mansion House Compact, which saw nine of the UK’s largest pension funds commit to allocating at least 5 per cent of their default funds to unlisted equities by 2030.

The latest update brings the total number of signatories to 70, who collectively have over £100bn assets under management globally.

Announcing the new backers, the BVCA emphasised that venture capital, growth equity and the wider private capital industry will need to continue working with the pensions industry to unlock capital and achieve benefits for pension savers.

It also argued that the long-term support of the government and regulators will be "crucial" to making these proposals a reality, highlighting the upcoming Autumn statement as a "real opportunity" to keep up the momentum on pension reform.

In particular, the BVCA urged the Chancellor to encourage consolidation of the sector into fewer, larger schemes to facilitate an increase in the investment of pension capital into UK private capital funds and UK businesses.

It also encouraged the government to take the opportunity to help increase pension scheme trustees’ knowledge and understanding of private capital, to help them recognise where private capital offers opportunities to increase their savers’ retirement pots.

It also suggested that the greater flexibility is needed in the regulatory environment to ensure that pension scheme trustees can focus on overall returns and value for money for pension savers.

Venture Capital Association and British Private Equity chief executive, Michael Moore, commented: “UK pension savers need secure retirements. Moreover, pension trustees need to work ever harder to deliver those secure retirements for today’s workers.

"UK private capital can help them achieve this, because, as an asset class, it has consistently delivered better returns for savers than public markets for decades.

“This is a great opportunity for British pension savers to benefit from returns garnered from VC innovation in the UK, while helping businesses to grow, succeed and create jobs.”

ICG Life Sciences managing director, Allan Marchington, added: “As part of ICG’s ambition to become the premier European Life Sciences investor, we are delighted to join the Venture Capital Investment Compact, which reinforces our commitment to support high growth life science companies.

“Despite the UK continuing to deliver world class research, when compared to the US there is a significant scale up gap for UK life sciences companies.

"This represents significant untapped economic potential and the Compact is an opportunity to help both bridge this lack of funding, and also provide better returns for UK pension savers.”

This also follows the news that the Chancellor, Jeremy Hunt, has announced a £320m plan designed to unlock the first tranche of investment from his Mansion House Reforms, including measures to build on the Venture Capital Investment Compact and further strengthen the UK’s renowned venture capital industry.

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