Fintech Growth Fund: Treasury rejects pleas for cash as questions swirl on funding
A much-hyped Fintech Growth Fund has been secretly lobbying the Treasury for support as questions swirl over how much money it has been able to raise from the private sector, City A.M. can reveal.
The Fintech Growth Fund, which ‘launched’ this August as a private sector-led initiative with Lord Philip Hammond as its chair, was formed on the back of a recommendation in the landmark Kalifa Review of Fintech in 2021, which proposed a specialised private sector fund to fill a dearth of growth capital in the UK.
Boss Phil Vidler told City A.M. in an interview in August that the fund had a “mandate” from the review and would raise £1bn to invest in growth companies, with backing already secured from the London Stock Exchange Group, Peel Hunt, Mastercard, Barclays and Natwest.
However, City sources have flagged concerns with City A.M. over how much money has actually been raised by the fund with bosses refusing to say how much capital had been committed.
City A.M. has now learned the firm has been secretly lobbying the Treasury for money as well as “endorsement” from ministers as the official fund of the Kalifa Review, both of which have been rejected.
“It’s not a Treasury thing,” a Treasury source told City A.M. last week. “[It’s] being peddled by someone lobbying for money.”
Another source told City A.M. the group asked for official “endorsement” to “help raise cash from the private sector” over the summer but the pleas had been rejected.
“I don’t think we ever would have [funded it] – it’s an industry recommendation from the Kalifa review. It’s not for us to fund,” the person said.
The revelations raise major questions over how much money the firm has actually raised and whether bosses were transparent on how it would be funded.
City A.M. can also disclose that of the five names included in the original announcement, just Barclays, Natwest and Mastercard have invested in the fund. The others have provided cash to the management company.
Vidler told City A.M. in August that all the named firms were ‘limited partners’ of the fund, meaning they had backed the investment vehicle itself, but later retracted the comments after City A.M. approached all the parties for comment.
The public relations agency that coordinated the announcement, Alma PR, which strongly rejected suggestions that FGF had misled over its funding structure, has also now parted ways with the firm. Alma declined to comment.
The revelations may strike a blow to the fund after it was recommended in 2021 as a vehicle led by industry specialist fund managers. Its target £1bn size would make it the largest dedicated fintech vehicle operating in the UK.
Boss Phil Vidler yesterday rejected claims it had continued to lobby for cash from the government and said it was an entirely private sector-led initiative.
“In the team’s initial discussions following the Kalifa review, published in early 2021, FGF explored several options on how best to structure the vehicle,” he said.
“This includes gauging any government desire to fund FGF in its entirety or co-invest alongside private sector players. We agreed with the government that this should be a private sector initiative in May 2021 and have not discussed funding with them since.”
City A.M. understands that the engagement has been ongoing long beyond that date, however.
The firm said it was still targeting its first investment by the fourth quarter of this year but it was is “dependent on a number of factors, including the investment opportunities in our target companies”.
Lord Hammond did not respond to a request for comment. There is no suggestion he was involved in lobbying the Treasury.