Scottish Widows Targets Quantum Computing With UK Venture Growth Investments

Insider Brief

• Scottish Widows is directing workplace pension savings into U.K. technology businesses, with Oxford Quantum Circuits and Quantum Motion among its expected initial investments.
• Aberdeen Investments appointed IP Group to oversee the venture growth portfolio, which also expects to invest in battery company Nyobolt and healthcare business Genomics Limited.
• Scottish Widows says the mandate aims to improve retirement outcomes and provide follow-on funding for British companies preparing to commercialize technology and expand.
• Image: Photo by Andrew Dawes on Unsplash

Scottish Widows is directing workplace pension savings into British technology businesses, with two quantum computing companies among its expected initial investments.

The pension provider has announced its first investments in U.K. venture growth companies through a portfolio overseen by IP Group, Corporate Adviser reported. The initial investments are expected to include Oxford Quantum Circuits and Quantum Motion, alongside battery technology company Nyobolt and artificial intelligence-enabled healthcare business Genomics Limited.

The arrangement follows Aberdeen Investments’ appointment of IP Group to manage a venture growth portfolio within the CG Scottish Widows Growth long-term asset fund, or LTAF. Scottish Widows says the mandate aims to improve retirement outcomes while supplying funding to British companies preparing to commercialize their technology and expand.

If you’re unfamiliar with Scottish Widows and think it sounds like an investors club of ladies who have lost their husbands, think again. Scottish Widows is a British pensions, investment and insurance provider that is part of Lloyds Banking Group with 6 million+ customers and about £300 billion+ assets under administration. Founded in Edinburgh in 1815, it provides retirement savings products, including workplace pensions through which employees build savings during their working lives.

The company says it is among the first workplace pension providers to invest members’ money in U.K. venture growth businesses.

“Our proposition helps connect our workplace pension customers’ long-term savings with some of Britain’s most innovative, high-growth companies, giving them access to investment opportunities that have traditionally been available mainly to institutional investors,” Peter Fitzgerald, Scottish Widows’ chief investment officer, said, according to Corporate Adviser.

Funding commercial expansion

The mandate targets a financing constraint that Scottish Widows says holds back Britain’s innovation economy: access to substantial follow-on investment for companies ready to bring products to market and grow.

Follow-on funding provides additional capital after a company’s earlier financing, helping it move beyond its initial development work. Scottish Widows says pension investment can help British technology companies turn scientific expertise into businesses operating at commercial scale.

“The UK has no shortage of scientific excellence and does not lack entrepreneurship or talent to develop globally relevant ideas. What competitive companies have lacked is sufficient pools of patient domestic capital to help them expand and grow,” Nalaka De Silva, head of private markets solutions at Aberdeen Investments, said, according to Corporate Adviser.

The expected investments span computing, energy storage and healthcare. IP Group’s announcement describes Oxford Quantum Circuits as a developer of commercially available quantum computing systems and Quantum Motion as a developer of silicon-based quantum computers.

Aberdeen Investments manages the growth sub-fund for Scottish Widows. IP Group’s portfolio forms part of Aberdeen’s broader global private markets remit, and the firms say the arrangement could expand over time to direct more pension capital into growing U.K. businesses, Corporate Adviser reported.

Pension funds broaden access

Scottish Widows says its main default funds will invest in the LTAF. Default funds are the investment options used for pension members who do not make their own selection.

Its Lifetime Investment Plus option has about 11% exposure to private markets, while Lifetime Investment Extra targets 23%, according to Corporate Adviser. Private markets include investments outside publicly traded stocks and bonds.

Both options are available through the Scottish Widows Master Trust, a workplace pension arrangement serving multiple employers. Employers can select them as defaults, and members can choose them directly.

The move follows Nest’s launch of a 200 million-pound venture capital allocation with Schroders Capital in July, Corporate Adviser reported.

The announcement also coincided with preparations by Scottish innovation minister Alyn Smith to urge international industry leaders to invest in Scotland’s quantum sector at an Edinburgh Castle reception Nov. 2