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M&G and Schroders Lead the Field to Run Britain's New £1 Billion Pension Backed Scale Up Fund

  • Writer: Shawn Jhanji
    Shawn Jhanji
  • 3 days ago
  • 4 min read
M&G Investments and Schroders are among the asset managers bidding to run Britain's proposed £1 billion Scale Up Fund, Sky News reported on Wednesday, as the consortium of pension providers behind the vehicle moves from announcement to execution. A number of other firms, including specialist early stage investors, have also applied, according to the report, and a formal manager appointment process is now under way. The fund traces back to an announcement in July, when Railpen, Nest and three of the six Local Government Pension Scheme asset pools, Local Pensions Partnership Investments, LGPS Central and Border to Coast Pensions Partnership, committed to explore a first of its kind vehicle dedicated to scaling British science and technology companies. The British Business Bank is working alongside the group and intends to co invest, while the Office for Investment is supporting the consortium as it develops the fund's structure. Government figures were direct about the gap the fund is meant to close. Chancellor John Healey said at launch that Britain creates great companies but does not do enough to grow them with British capital or keep the profits at home, and that the ambition is for the UK, already the world's third largest venture capital market, to back its own scale ups with domestic money rather than watching them raise, and often relocate, abroad.

M&G Investments and Schroders are among the asset managers bidding to run Britain's proposed £1 billion Scale Up Fund, Sky News reported on Wednesday, as the consortium of pension providers behind the vehicle moves from announcement to execution. A number of other firms, including specialist early stage investors, have also applied, according to the report, and a formal manager appointment process is now under way.


The fund traces back to an announcement in July, when Railpen, Nest and three of the six Local Government Pension Scheme asset pools, Local Pensions Partnership Investments, LGPS Central and Border to Coast Pensions Partnership, committed to explore a first of its kind vehicle dedicated to scaling British science and technology companies. The British Business Bank is working alongside the group and intends to co invest, while the Office for Investment is supporting the consortium as it develops the fund's structure.


Government figures were direct about the gap the fund is meant to close. Chancellor John Healey said at launch that Britain creates great companies but does not do enough to grow them with British capital or keep the profits at home, and that the ambition is for the UK, already the world's third largest venture capital market, to back its own scale ups with domestic money rather than watching them raise, and often relocate, abroad.


Railpen chief executive Andy Bord described the opportunity as one where disciplined, patient capital can help growing companies scale while generating lasting economic growth. Nest chief executive Ian Cornelius framed it as pension capital helping successful UK businesses access the funding they need to grow, delivered in a way that aligns member returns with job creation. British Business Bank chief investment officer Leandros Kalisperas called it a chance to create a virtuous cycle, pairing long term pension capital with ambitious growth businesses to attract further private investment.


Those are the right words for a press release. The manager selection now under way is where the fund's real character will be decided, and it is worth founders and the wider ecosystem paying attention to how that plays out.


Generalist asset managers such as M&G and Schroders bring scale, existing infrastructure and institutional credibility that a fund of this size arguably needs, particularly when the capital comes from bodies with fiduciary duties to millions of savers. But they are not, by background, specialists in the mechanics of scaling founder led technology and science businesses, where the value add is often less about capital allocation discipline and more about follow on conviction, board support through difficult rounds and a tolerance for the non-linear growth curves that characterise deep tech and life sciences. Specialist early stage investors, several of which have also applied according to the Sky News report, would bring that domain expertise but at typically smaller scale and without the balance sheet heft of a listed asset manager.


This is not a new tension. It shows up whenever institutional capital tries to reach the growth stage gap that has structurally under served UK companies relative to their US counterparts, and it is precisely the kind of fund level decision that this publication has flagged as underreported relative to headline funding rounds. Who manages the money shapes whether it behaves like patient, founder aligned growth capital or like a conventional listed asset management product wrapped in a British growth narrative. Mandate design, not headline size, is usually the more reliable predictor of which UK scale ups actually benefit.


There is a genuine and still open question here, and it is worth asking plainly rather than assuming the answer. Should a fund built to solve a structural UK capital gap be run by the institutions best placed to raise and administer £1 billion at speed, or by the investors best placed to understand what a scaling deep tech founder actually needs from a term sheet and a board seat. Border to Coast chief executive Rachel Elwell pointed to her organisation's existing UK Opportunities strategy as evidence that pension capital can be deployed at scale into high quality domestic opportunities, which suggests the consortium may lean toward proven institutional process. LGPS Central chief executive Richard Law-Deeks was more exploratory in tone, framing the fund as a practical route for long term LGPS capital that still needs to prove it can improve access to opportunities individual funds could not reach alone.


How this resolves matters beyond one mandate. If the Scale Up Fund becomes a template that other pension consortia replicate, the answer the British Business Bank and its partners land on now, generalist scale versus specialist judgement, or some hybrid structure that pairs the two, will shape how a meaningful share of future domestic growth capital reaches UK founders. Readers with a view, particularly founders who have taken growth stage capital from either type of manager, are invited to make the case either way; this publication will follow the appointment as it develops.


Key Takeaways


  • M&G Investments and Schroders are among several asset managers, alongside specialist early stage investors, bidding to manage the UK's proposed £1 billion Scale Up Fund, Sky News reported on 26 August 2026.

  • The fund was first announced in July 2026 by a consortium including Railpen, Nest, and the Local Pensions Partnership Investments, LGPS Central and Border to Coast LGPS pools, with British Business Bank co-investment and Office for Investment support.

  • The stated goal is to keep more UK growth capital and returns onshore, helping science and technology scale ups commercialise and create jobs without relying on relocating abroad to raise.

  • The choice between a generalist institutional manager and a specialist early stage investor is likely to determine whether the fund behaves as patient, founder aligned growth capital or a conventional asset management product.

  • The publication is treating the manager appointment as an open and consequential question worth tracking, not a settled formality, and invites founders and investors with direct experience of either model to respond.


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