UK Innovation Investment Fund Receives Boost

UK Innovation Investment Fund Receives Boost

In the summer, the Government announced it intended to set up a UK Innovation
Investment Fund by investing £150 million on a ‘pari-passu’ basis.

UK Innovation Investment Fund will ensure that venture capital is available
by early 2010 to invest in innovative British businesses in key sectors, such as
life sciences, clean technology, digital and advanced manufacturing.

The Government’s cornerstone investment in the Fund has leveraged
an additional £175 million from investors, creating a pool of funding initially
worth £325 million (once legal agreements have been signed).

Further private investment will be secured before the Fund closes to
investors in 2011.  The ambition remains to create a billion pound 15-year
fund.

Fund-to-fund managers 

Yesterday, the Chancellor announced the appointment, subject to contract, of
Hermes Private Equity and the European Investment Fund as managers for the UK
Innovation Investment Fund.

The Government will invest £100 million in a £200 million technology fund
managed by the European Investment Fund, which will cover digital/ICT, life
sciences and advanced manufacturing.

It will also invest £50 million in a £125 million low-carbon and clean tech
fund managed by Hermes Private Equity, which covers all technology sectors at
all stages.

Science & Innovation Minister Paul Drayson said: “The UK Innovation
Investment Fund has been a hit with investors.  We can now ensure that Britain’s
high tech growth companies will have the capital to fulfil their potential.  By
backing entrepreneurs we back jobs and growth.”

Both Hermes Private Equity and the European Investment Fund have
international reputations and solid track records of investing in technology.

Commenting on the announcement, Simon Walker, Chief Executive of the British
Private Equity & Venture Capital Association said: “This is terrific news
for UK venture capital.  To achieve £325m in less than six months after the fund
was announced is very impressive, particularly in the current climate.  This
will be much needed investment for the young, innovative businesses which will
create jobs and opportunity in our future growth areas.  It is these
venture-backed companies that can be at the vanguard of the UK’s economic
recovery.”

Opportunity for clean tech sector

As the UK Government seeks global agreement in Copenhagen on reducing carbon
emissions, the clean tech sector is presented with a major opportunity.  The UK
Innovation Investment Fund will target £125 million on companies developing
clean technologies to ensure that the UK is at the forefront of global efforts
to move to a low-carbon economy.