Chancellor Philip Hammond has announced the Government will today publish a ‘patient capital’ action plan that aims to unlock £20bn of new investment in UK scale-up businesses.
A patient review was announced a year ago and was touted as part of the Government’s industrial strategy to increase productivity and drive growth through breaking down the obstacles to getting long-term investment into innovative firms.
Hammond said a £2.5bn fund will be dedicated to creating more UK “unicorn” companies, which are start-ups worth over $1bn.
He notes that currently a tech business is founded in the UK every hour, but he wants to double that figure to every half hour.
A consultation document, Financing Growth in Innovative Firms, was released in August and was largely focussed on keeping pace with the US, where a quarter of start-ups make it to the fourth round of funding, compared to one in 10 in the UK.
Investment trusts were named as an area with capacity for greater retail investment, while proposals for a patient capital Isa were rejected in the consultation document.
An industry panel for the review included star UK equities manager Neil Woodford, Legal & General chief executive Nigel Wilson and Miton Capital managing director Gervais Williams.
Patient Capital Review
The HM Treasury-led review sought to identify barriers to access to long-term finance for growing firms. The terms of reference set out that the review were:
- Considering the availability of long-term finance for growing innovative firms looking to scale up
- Identifying the long-term root causes affecting the availability of long-term finance for growing innovative firms, including any barriers that investors may face in providing long-term finance
- Reviewing international best practices to inform recommendations for the UK market
- Considering the role of market practice and market norms in facilitating investment in long-term finance
- Assessing what changes in Government policy, if any, would be needed to support the expansion of long-term capital for growing innovative firms
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