Fintech cash injection from Canadian pension fund reignites calls for UK schemes to ‘step up’
A cash injection from one of Canada’s biggest pension funds into a London fintech firm has reignited calls for UK pension funds to “step up” and back British tech today.
The Ontario Teachers’ Pension Plan, which manages around $227.7bn in assets, led a £210m funding round into consumer fintech Lendable yesterday via its Teachers’ Innovation Platform.
But tech leaders and VC firms say it is time for UK pension funds to start emulating foreign pension funds by investing in high growth British firms, rather than letting the benefits go abroad.
“It’s not surprising to see the rest of the world invest in our vibrant and innovative UK tech sector,” said Gerard Grech, chief executive of Tech Nation.
“We also need domestic investors to back UK tech with the same visible level of commitment, given the sector’s track record and global position.”
Pension cash flowing into UK tech would allow the sector to thrive and become an “investment engine for our own domestic economy”, Grech said.
The UK’s pension funds have traditionally been locked out from such investments due to a cap on money management fees, which typically prevents money from flowing into growth businesses via private equity and venture capital firms which charge higher fees.
The boss of the UK’s most active investment firm BGF said it was time to loosen the cap to unlock the institutional capital in UK pension schemes.
“We can’t simply rely on international pension funds to support our growth – the UK needs its own pension funds to step up to the plate,” said Stephen Welton.
“There is an urgent need – and opportunity – to channel more funding into growing firms, and by doing so create new jobs and boost our economic prospects.”
The UK currently has a growth funding gap to the tune of £15bn, according to the Scale Up Institute, and Welton said loosening the cap could allow pension cash to fill the gap and allow the sector to thrive.
Government closed a consultation on whether to loosen the charge cap in January and is expected to deliver a verdict this year.
Foreign pension funds have been accelerating a push into Britain’s private markets with Australia’s largest pension scheme, AustralianSuper, saying in February it plans to invest £23bn in the UK and Europe over the next five years.