LONDON, Nov 21 (Reuters) – The British Business Bank (BBB) has announced plans for pension schemes and asset managers to grow as part of wider reforms to free up savers’ money to boost Britain’s financial economy. Establish a new fund to invest in companies. The ministry announced this on Tuesday.
Britain wants to encourage pension schemes to shift some of their cash from a focus on bonds and global blue-chip companies to investing in growing British companies, which it says will lead to better returns for investors.
The move is also aimed at building a strong pipeline of potential company listings as the London Stock Exchange faces increased competition from New York and the European Union’s post-Brexit financial centers.
British Chancellor of the Exchequer Jeremy Hunt is due to table a budget on Wednesday that includes measures to implement the Mansions and Houses Compact announced in July.
Under the agreement, the 10 companies voluntarily committed to investing 5% of their pension funds in small listed companies and unlisted growth companies by 2030.
The department said the measures Mr Hunt will announce on Wednesday will help invest the £75bn “first tranche” made available under the Mansion House reform.
The BBB will invest £250m to seed two investment vehicles under the UK’s Long-term Investments in Technology and Science (LIFTS) initiative. Both can also be used for pension schemes and have the potential to attract a total of more than £1bn of private capital, the department said.
Another new growth fund at state-backed development bank BBB will leverage a permanent capital base of more than £7 billion, BBB said in a statement.
“The bank will now work closely with the industry on the design of the investment vehicle and will announce further details thereafter,” BBB said.
At least £50m of additional funding will also be provided to the BBB’s Future Fund: Breakthrough programme, which provides direct investment to support promising UK innovative companies.
“Tomorrow’s Autumn Statement will be a major step towards delivering Mansion House reform and unlocking the full potential of the pensions industry,” Mr Hunt said in a statement.
Report by Huw Jones.Editing: Christina Fincher
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