£2.5bn British Patient Capital Programme launched to enable long-term investment in innovative companies across the UK
The British Business Bank is launching British Patient Capital, a new £2.5bn programme designed to enable long-term investment in high growth potential companies across the UK led by ambitious entrepreneurs who want to build successful, world-class businesses.
The creation of the £2.5bn programme is one of the key outcomes of the Patient Capital Review. Announced by the Chancellor at Autumn Budget 2017, the programme is an important element of the Government’s Industrial Strategy. It will support UK businesses with high growth potential to access the long-term financing they need to scale up. By investing alongside the private sector, British Patient Capital will support a total of £7.5bn of investment for British businesses. British Patient Capital will be developed as a separate subsidiary of the British Business Bank with a view to future sale into the private sector with an established portfolio and proven track record.
The British Business Bank’s Venture Capital Catalyst programme’s existing and approved commitments of c. £400m will be transferred to British Patient Capital, allowing the new programme to start with a strong track record of commitments to venture and growth capital funds. Among the investments being transferred are:
A £30m cornerstone investment in venture capital firm Draper Esprit’s £115m capital raise. This will be the programme’s first evergreen investment, expanding the market for long-term investment in the UK. Completion of this investment is subject to Draper Esprit shareholder approval.
A £9m investment in the Dementia Discovery Fund, a specialist, 15-year life venture capital fund that invests in novel science to create meaningful new medicines for dementia. The fund benefits from a diverse range of strategic investors including charity, pharma, public and significant private investors.
Rt Hon Philip Hammond MP, Chancellor of the Exchequer, said: “The UK is home to some of the world’s most innovative companies and I want to make sure that they stay at the forefront of the tech revolution. So, British Patient Capital will provide an extra £2.5 billion for these cutting-edge businesses ensuring Britain remains one of the best places to start and grow a company.”
Rt Hon Greg Clark MP, Secretary of State for Business, Energy and Industrial Strategy, said: “Through our modern Industrial Strategy, we are working to support companies both large and small to scale-up and maximise their potential. British Patient Capital will make a valuable contribution to this aim, helping to build Britain’s status as the best place in the world to start and grow a business and ensuring UK firms can access the long-term investment they need to succeed.”
The British Business Bank has significant experience as both an institutional investor and supporting a diverse patient capital market. Its Enterprise Capital Funds (ECF) programme has an investment capacity of £1.1bn of funds and helped grow several start-up funds into major names in the venture capital market. The Bank’s Chief Executive Keith Morgan has been appointed as the Chairman of British Patient Capital.
Keith Morgan, Chief Executive, British Business Bank and Chair of British Patient Capital said: “A major barrier holding back the continued development of young innovative firms is access to longer-term investment. The lack of this patient capital slows these firms’ growth and holds back the UK’s productivity. British Patient Capital has been created in consultation with Government and the finance community to help ensure that high potential, high growth businesses can access the long-term finance they need to build the UK’s innovation economy.”
Simon Cook, CEO, Draper Esprit plc said: “Having invested in businesses such as Perkbox, Lyst, Graphcore, Graze and, more recently, Revolut, we have a strong record of working with ambitious UK start-ups throughout the country, from Bristol to Newcastle and Cambridge to Belfast. As such, we are delighted to be working with the British Business Bank and their British Patient Capital programme to provide UK start-ups with the investment they need to scale up and become the Googles, Facebooks and Amazons of tomorrow.”
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