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

The newly-approved LTAF will offer defined contribution (DC) and other institutional investors the opportunity to participate in the development of UK early-stage companies focused on technology and life sciences.

In line with this, the fund will look to invest across companies that are pioneering the development of long-term innovation themes such as artificial intelligence, quantum computing, fintech, cybersecurity and oncology.

The Treasury previously announced that Schroders and Intermediate Capital Group (ICG), supported by pensions capital from Phoenix Group, were the winners of its Long-term Investment for Technology and Science (LIFTS) competition.

As a result, the fund will be seeded with a cornerstone investment of £300m, with both Phoenix Group and the British Business Bank making a £150m commitment to the fund as part of the LIFTS initiative.

Commenting on the launch, Schroders Capital head of private equity investments, Tim Creed, said: “The UK is the largest venture capital market in Europe and a key global innovation hub.

“This fund will allow a broader range of investors to benefit from the next technology revolution and access innovative companies driving long-term megatrends.

“With the UK being home to a growing number of unicorns and our ability to invest through the full lifecycle, we can tap into the best companies with high growth potential on behalf of our investors.”

Adding to this, Schroders head of UK DC, Tim Horne, said: “Supporting the UK Government’s Mansion House reforms, this fund will help unlock the potential for DC schemes to invest into fast-growing, early-stage companies.

“These investors have so far been underweight private markets, venture capital and UK businesses in particular.

“Schroders has been an innovator in providing UK DC investors with access to private markets, having launched the UK’s first LTAF last year. This will be the UK’s first dedicated vehicle for DC investors to access venture capital.

“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.”

LTAFs are vehicles designed to enable UK investors with longer-term horizons to invest in more illiquid assets, allowing them to take advantage of the robust returns and diversification benefits of private markets.

This article was originally published on our sister title, Pensions Age.

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