The British Business Bank (BBB) and Phoenix Group have invested a combined £500m with Schroders Capital under the Long-Term Investment for Technology and Science (LIFTS) initiative to create a new investment vehicle available to pension schemes and other institutional investors.

The BBB has completed its £250m commitment, which will be matched by £250m of pension investment from Phoenix, to invest in UK companies focused on science and technology.

In September, Schroders Capital received regulatory permission to launch its third Long-Term Asset Fund (LTAF), which is the first dedicated to UK venture capital.

Phoenix will make its investment through its private markets joint venture with Schroders, Future Growth Capital.

The LTAF is the first dedicated to UK venture capital, and Schroders Capital is expected to begin making investments before the end of 2024.

It will seek to offer defined contribution (DC) schemes the opportunity to invest in the growth and development of UK companies focused on technology and science, with the government expecting 20 per cent of LIFTS capital to be invested in life sciences.

The investments were confirmed in Chancellor, Rachel Reeve’s, Mansion House speech, as the government looks to encourage pension investment in UK plc.

“LIFTS is a potentially game-changing initiative,” said BBB CEO, Louis Taylor.

“With the intention of catalysing more than £1bn of funding, including from UK pension funds, LIFTS will support the growth and ambitions of the UK’s most innovative science and technology companies, which with the right finance and support can become the world-beating businesses of tomorrow.

“We are pleased to have completed our investment with Schroders Capital, alongside Phoenix Group and Future Growth Capital, as they build towards making their first investments under the initiative by the end of this year.”

Phoenix Group CEO, Andy Briggs, commented: “Currently pension savers in the UK receive lower returns than their counterparts in places like Australia and Canada, partly because the UK allocates much less to private market assets than equivalent countries.

“This £250m investment on behalf of our customers into the UK government’s LIFTS initiative, will provide stable patient capital to the UK’s most innovative businesses. It will help to accelerate their growth, whilst also giving our customers access to a broader range of assets with potential for higher returns.”

Also commenting on the announcement, Schroders Capital CEO, Georg Wunderlin, added: “The UK is home to some of the most innovative early-stage technology and life sciences companies in the world.

“This significant cornerstone investment from BBB and Phoenix will encourage further domestic investment in these key growth sectors, enabling these companies to maintain their edge and continue to innovate from here in the UK.

“The LTAF structure enables access for a wider pool of investors, allowing pension savers to benefit from the growth potential of these companies while unlocking much needed investment to continue to drive their development.

“Furthermore, our strategic partnership with Phoenix, Future Growth Capital, supports the UK’s Mansion House Compact and will provide scale to unlock these investment opportunities in private markets and the benefits they can offer.”

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