British Business Investments, London, is searching for funds-of-funds managers to run up to £500 million ($677 million) in venture capital assets for its Managed Funds Programme.
The program is one element of the U.K. government's action plan to unlock more than £20 billion of "patient capital" — or long-term investments — from pension funds and other investors over the next 10 years to help finance growth of innovative firms, announced in the autumn budget 2017.
U.K. government-owned BBI, the commercial arm of the British Business Bank, said in a request for proposals that the program will remain open for applications until all available funds have been committed. It intends to make between three and four commitments in the initial stage of the program, but could choose to make more or fewer.
One objective of the program is to attract private capital and expand investor diversity for innovative venture and growth capital in the U.K., said the RFP. "BBI is looking to attract a significant amount of private capital by cornerstoning each fund of funds in which it makes an investment." The ultimate goal of the program is to show that longer-term, later-stage venture and growth capital investments can "attract sufficient private capital without the need in future for government-funded interventions," it said.
The BBI wants managers to show experience and capacity to make and monitor investments across the whole of the U.K., and have an investment period of around three to five years. It is looking for an overall strategy lifetime of 10 to 12 years, with an ability for investors to approve extensions to each of those periods.
The patient capital investment program is growth-oriented, and so proposals specialized in management buyouts or similar replacement capital strategies will not generally be considered, added BBI. It also expects the investment strategy of the funds-of-funds strategies to exclude investment into strategies that benefit from any form of public subsidy.
A spokesman said BBI expects to select the first money manager by the end of March 2019. There is no set timeline for the commitments, but it is expected to take around two to three years.