Railpen Establishes £1 Billion Fund for UK Scale-ups
Railpen, which manages approximately £36 billion in assets on behalf of over 350,000 members, is taking a leading role in the establishment of a new Scale-up Fund that is expected to exceed £1 billion in size. This innovative financial vehicle is specifically designed to provide long-term capital to support high-growth companies in the United Kingdom, addressing a critical need in the country’s economic development environment. The initiative represents a significant step forward in tackling a persistent challenge that many dynamic businesses face: securing patient funding necessary to scale operations within the domestic market.
The Need for Long-Term Capital
While the UK’s universities and research institutions consistently generate world-class ideas and talent, access to sustained financial support has historically limited the growth potential of promising firms. Railpen advocates emphasize that scaling businesses requires capital that remains committed over extended periods, often until exits such as acquisitions or public listings occur. Private markets, though less liquid than their public counterparts, offer long-term investors like Railpen the opportunity to benefit from an illiquidity premium. This strategic advantage aligns perfectly with the multi-decade liabilities faced by pension funds, making such investments both viable and advantageous for members seeking diversified, resilient portfolios.
Railpen’s Role in the Scale-up Fund
The Scale-up Fund is the result of months of collaboration among Railpen, other pension funds, and government bodies. Since 2023, Railpen has championed this effort, arguing that targeted investment in high-growth companies can enhance risk-adjusted returns while simultaneously supporting the UK economy. The fund’s structure is carefully designed to balance fiduciary responsibilities with the potential rewards of innovation. “A well-designed innovation ecosystem allows each participant to fulfil its core purpose without compromise… The goal is not to trade off one objective against another, but to create conditions in which all can succeed together,” explained Anna Rule, Railpen’s director of private markets and real assets investments.
Benefits of the Fund
The initiative seeks to address gaps in the innovation pipeline, where founders often lack experience in governance, reporting, or interacting with institutional investors. By providing not only capital but also strategic stewardship, the fund aims to help businesses mature sustainably. Data from UK Private Capital (formerly the BVCA) shows that since 2006, UK private capital has delivered annual returns around 55% higher than the FTSE All Share. This performance highlights the potential of private markets to complement traditional investments, offering diversification and resilience against public market volatility.
Supporting the Innovation Ecosystem
The Scale-up Fund is part of a broader effort to connect the various stages of the innovation lifecycle. From university laboratories to venture funding, product piloting, institutional investment, and eventual public markets, progress depends on a cohesive ecosystem. Railpen argues that pension funds can play a key role by offering both capital and governance expertise, helping businesses handle complex growth phases. The collaboration between public and private stakeholders reflects a growing recognition that innovation thrives when each participant—governments, universities, investors, and businesses—can operate effectively without compromising their core missions. The Scale-up Fund exemplifies this approach, aiming to accelerate the UK’s innovation economy through strategic, long-term investment.
