A group of the UK's largest pension providers is exploring the creation of a £1 billion investment fund designed to support high-growth British science and technology companies.

The proposed UK Scale-up Fund aims to channel pension capital into innovative businesses with the potential to commercialise new technologies, expand their operations and create skilled jobs across the UK.

The initiative, announced by the Department for Business and Trade, HM Treasury, and the British Business Bank, would also seek to generate long-term returns for pension savers by giving them greater exposure to successful UK growth companies.

The government said the fund would help address the shortage of domestic growth capital available to innovative businesses, enabling more companies to remain in the UK as they scale rather than seeking overseas investment.

The British Business Bank is working with the pension providers to support the launch of the fund and with the intention of investing in partnership with the group. The Office for Investment is also supporting the consortium as it explores the development of the fund.

The consortium has not yet confirmed when the fund could launch, or which pension providers will ultimately participate. It is currently exploring the structure and investment strategy for the proposed vehicle.

Business, innovation, science and trade secretary Jonathan Reynolds said the moves is designed to ensure that more promising businesses can start, scale and succeed in the UK.

“The ambition of major pension providers to back the next generation of British success stories is an important vote of confidence in UK innovation,” he added. “By investing in innovative UK companies, they can help drive long-term growth while helping pension savers share in their success.”

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