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The state-backed British Business Bank will ask for more cash in the chancellor’s budget for regional development to support the government’s “levelling up” agenda after overseeing a tenfold increase in its portfolio last year.
The BBB oversaw much of the UK’s Covid-19 business support programme in 2020, including the £47bn “bounce bank” loan scheme, expanding its remit massively as a result. The UK’s national economic development bank now manages £89bn of financial support to 1.8m businesses, up from just £8bn in 2020.
The bank will ask for extra money from the chancellor in the autumn spending review to support further regional development and to extend the start-up loan programme.
Catherine Lewis La Torre, chief executive of BBB, declined to comment on the request for regional funds but added that she would like to “scale up” the start-up loan scheme given its growing importance in supporting businesses around the UK.
She added that the government had already seen a “surprise” in the financial return from its existing portfolio.
The group will on Wednesday say that its non-Covid investment portfolio of £8.5bn, which has supported almost 95,000 smaller businesses, has resulted in a return to the taxpayer of almost 15 per cent.
These investments are made through supporting lenders, venture capital funds or directly to domestic start-ups.
The BBB’s portfolio of investments has benefited from the sharp rise in tech valuation over the past year given its stakes in fast-growing groups, such as virtual events company Hopin.
The BBB has also overseen the UK’s start-up support programme, which provided more than 11,000 loans last year. The bank’s regional funds — the Northern Powerhouse, Midlands Engine and Cornwall and Isles of Scilly investment funds — provided £357m.
of financial support to 1.8m businesses is managed by BBB
She pointed to the success of its British Patient Capital arm, which can invest up to £2.5bn in innovative groups through external fund managers or directly in start-ups.
“The financial return is really a reflection of the underlying equity portfolio now starting to show the first signs of progress driven by a number of amazing companies.”
The division also oversees the government’s new £200m life sciences investment programme, which La Torre said was close to making its first two deals.
“That’s a relatively limited amount of capital — two to four investment opportunities. We are pretty confident that £200m will be invested well, and in a reasonably short period of time as well.”
The BBB said that managing the large portfolio of Covid-19 loans and equity investments on behalf of the UK taxpayers would be an important part of its role in coming years.
The bank also oversees the government’s Future Fund scheme, which co-invests in start-ups using convertible loans and has made the group the UK’s largest venture capital provider.
La Torre said that another 40 start-ups were going through the process of converting these loans into equity, which would take the government’s stakes in small companies through the scheme to above 200. She added a decision would need to made over the future ownership of the £1.1bn fund.
“But I think they’ll want to see as we do what the size and shape of that portfolio is.”
The BBB was “still investigating” the loans extended by Greensill Capital to Sanjeev Gupta’s steel empire under the state Covid-19 schemes. “I think this one will run and run, and we’re still in the investigation part of the process,” La Torre said.
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