The BVCA, with the support of the Government, has launched the Venture Capital Investment Compact (the “VCIC” or “Compact”), a commitment by UK venture capital and growth equity fund managers to develop a long-term and constructive working relationship with UK pension investors. This will offer an exciting investment opportunity for pension savers and could help enable greater investment into the UK Science and Technology sectors.
The UK venture capital and growth equity industry will work with pension providers over the next 12 months (from October 2023 to October 2024) to progress the delivery of the proposals set out in the Compact. This will seek to deliver on the Government’s objectives to increase UK pension scheme investment into venture, growth and other private capital funds as part of a diversified portfolio, which was set out in the Chancellor of the Exchequer’s Mansion House proposals.
The VCIC builds on Mansion House Compact of July 2023 which saw nine of the UK’s largest Defined Contribution pension providers commit to the objective of allocating at least 5% of their default funds to unlisted assets by 2030.
The BVCA has been involved over many years in the policy considerations and key initiatives, such as the Productive Finance Working Group
, that have been aiming to remove the regulatory, cultural and operational barriers to this investment. The Compact represents the next stage of this work and will help to drive it forward.
With over 80 signatories, the Compact represent some of the UK’s leading venture capital and growth equity fund managers, with over £100bn of Assets Under Management. The signatories recognise that the Government’s aim to unlock over £50bn of capital by 2030 is a unique opportunity for pension savers and could enable them to benefit from higher potential net returns whilst increasing UK-based funding for the UK Science and Technology sector. According to the City of London Corporation, only 0.5% of UK DC pension assets are invested in unlisted UK equities such as venture capital and growth equity.