The European Investment Bank, the European Union's long-term financing arm, is backing the United Kingdom Government's new initiative to set up a UK-wide umbrella venture capital arrangement to be managed by the Small Business Service with a new Small Business Investment Taskforce. Public sector-backed venture capital funds currently being created in the UK will be rolled up under the umbrella arrangement that will be managed by the Taskforce.
The EIB has agreed to support a key element in this initiative by becoming a cornerstone investor in the forthcoming UK's first public-private venture capital partnership, the UK High Technology Fund. The EIB is working with the Department of Trade and Industry and Westport Private Equity Ltd. in the development of the fund. The Technology Fund will mainly focus on early stage high technology business in the UK acting as a fund of funds. It will increase the flow of equity to early stage companies, and help encourage pension funds and institutional investors to invest in early stage technology based funds.
EIB Vice President, Peter Sedgwick said: "The EIB welcomes this initiative to enhance risk capital in the UK, and particularly the focus the Government is giving to support additional venture capital in the priority assisted areas in England, Scotland, Wales and Northern Ireland. The new Taskforce is a model for the development of public-private partnerships in the EU in this field. We hope to increase our support for such UK initiatives in the future".
The EIB and its associate the EIF (European Investment Fund) are already involved in the financing arrangements of several of the funds that are to come under overall management of the Taskforce, as well as other UK-based private equity funds, including those with a pan-European scope. In expanding its support for UK venture capital initiative, the EIB will invest through co-financing arrangements with public sector partners and private sector financial and institutional investors and banks.
EIB is in discussions with Regional Development Agencies, Central Government departments and the devolved administrations as well as with private sector institutions on the establishment of new funds.
The EIB was authorised in June 1997 by the European Council of Ministers to invest up to EUR 1 billion in venture capital facilities in support of innovation and technological development by SMEs throughout the European Union. Since then, investments have been approved in 40 Venture Capital Funds throughout the EU and investment commitments of some EUR 500 million had been signed, and a further EUR 250 million is being managed by the EIF, through the European Technology Facility. In recent months, in addition to other UK venture capital funds, EIB has approved over EUR 75 million for the Barings English Growth Fund, UK High Technology Fund and the Viridian Northern Ireland Growth Fund.The EIB finances capital investment furthering EU objectives, in particular for: regional development; trans-European transport, telecoms and energy; networks, industrial competitiveness and SMEs; environmental protection; and energy security. It also operates outside the EU to support the EU's external co-operation policy. Owned by the EU Member States, the EIB raises its funds on capital markets (AAA issuer). In 1999, the EIB lent some EUR 30 billion, equivalent to £ 19 billion, of which £2.2 billion in the UK.