The UK’s £1.9bn (€2.3bn) Royal County of Berkshire Pension Fund is to invest £15m in a new fund aiming to direct institutional capital into the commercialisation of UK university research.
The local authority pension fund committed the £15m to the British Innovation Fund (BIF), launched on 1 December by Future Planet Capital and Milltrust International Group.
The fund has received commitments of £30m so far.
Berkshire pension fund, administered by the Royal Borough of Windsor & Maidenhead (RBWM), is making the investment as part of a broader overhaul of its private equity portfolio, according to Nick Greenwood, pension fund manager of RBWM and chair of the BIF Investment Committee.
The private equity portfolio has been redesigned to focus on three core themes, one of which is technology, he said.
“We considered a range of investment possibilities in the US, South East Asia and elsewhere before deciding to focus on the UK university sector, which represents a massive un-tapped opportunity,” said Greenwood.
“The valuations are also more attractive in the UK than they would be in Silicon Valley, and the investment industry around university research is less well-developed.”
BIF recently secured a stake in Oxford Sciences Innovation as part of a £230m funding round for the firm, in which investors such as the Singaporean sovereign wealth fund Temasek and the Oman Investment Fund also participated.
It plans to acquire other stake in companies focused on the commercialisation of UK university research and invest directly in start-ups reaching growth stage.
The fund is structured as an Irish Collective Asset Vehicle (ICAV).
Greenwood said the fund’s evergreen structure made it “a better fit” for this type of investment than the traditional venture capital model.
“A standard VC fund has a fixed lifespan, forcing inefficient exits and liquidation of stakes in companies that are still being developed,” he said.
“An ICAV structure gives us the opportunity to nurture investments appropriately.”
Future Planet and Milltrust Agricultural Investments (MAI), a subsidiary of Milltrust International Group, are the sub-advisers to the new fund.
The investment committee will also include members of the Future Planet and Milltrust Agricultural Investments teams, including Douglas Hansen-Luke, chair of Future Planet, and Griff Williams, CIO and co-founder of MAI.
Hansen-Luke said there was “huge potential” for intellectual property commercialisation in the UK university sector, and that £400m in new long-term funding provided by the British Business Bank showed the UK government had recognised this gap.
Simon Hopkins, chief executive at Milltrust International Group, said the BIF provided “a direct response” to concerns that Brexit would jeopardise funding for the development and subsequent commercialisation of research output from leading UK universities.
Future Planet is a company aiming to build a “global university platform”, providing access to investment in top innovation centres.
Milltrust is a global investment organisation located in Singapore and London, offering investment advice focused on emerging markets, liquid investments and real assets investments.
During 2015-16, Berkshire pension fund increased its exposure to private debt and private equity funds – for example, in new emerging market infrastructure but also UK middle-market infrastructure and other private market investments in the UK, such as the private rented sector, private debt and technology.