M&G Investments and Schroders are among the firms bidding to manage the £1bn Scale-up Fund, the pension-backed vehicle announced in July and administered with British Business Bank support, according to reporting by Sky News.
The fund is designed to route domestic pension capital into late-stage British science and technology companies. Its stated purpose is retention: keeping high-growth businesses listed, headquartered and owned in the UK rather than losing them to overseas acquirers or foreign exchanges at the point they need their largest cheques.
Announced last month by Prime Minister Andy Burnham, the vehicle is backed by a group of pension investors including Local Pensions Partnership Investments, Border to Coast, Railpen and Nest. The British Business Bank is providing administrative and financial backing.
The manager contest is now the live question. Alongside M&G and Schroders, several early-stage investors are understood to be in contention for the mandate. Stockholm-based EQT is not thought to be bidding. Eligibility criteria for the companies the fund can invest in have not yet been published, which leaves the scope of the mandate — stage, cheque size, sector definition — unresolved.
Scale matters here. At £1bn, the fund is a fifth the size of the European Union's comparable Scaleup Europe vehicle, which manages €5bn. Deployed across a multi-year programme into late-stage rounds, £1bn buys minority positions in a modest number of companies rather than a market-moving pool of capital.
That is the cap-table consequence. UK growth rounds above £50m have for years been led by American and continental funds, which take the ownership and set the terms. A domestic pool of this size changes the composition of a syndicate at the margin without displacing the lead. Whether it shifts ownership meaningfully depends on cheque size per deal, which the eligibility criteria will determine.
The manager appointment also decides the fund's character. A mainstream asset manager such as M&G or Schroders brings pension-grade governance and reporting but limited venture underwriting history. An established early-stage firm brings the reverse. The choice signals whether the Treasury is optimising for capital deployment discipline or for venture returns.
Burnham said the fund would connect pension investment with the entrepreneurs and technologies expected to reindustrialise Britain, and framed it as growth in every postcode. No appointment date has been set.
Original source: Sifted — https://sifted.eu/articles/uk-scale-up-fund-managers-schroders/
