£1bn UK fund up for grabs

LEADING investment fund managers are competing to control up to £1bn of UK government money, as part of a scheme that aims to make it easier for medium-sized firms to raise funds.

The Treasury has called for applications to take part in its Business Finance Partnership (BFP) scheme, which aims to break the control of banks over credit by lending directly to British firms.

City A.M. understands that several top managers are interested in taking part, with M&G and BlueBay considered to be possible applicants.

Public money will be invested on a commercial basis, with the government providing up to 50 per cent of each fund on the condition that the money is lent to UK businesses with a turnover of less than £500m.

M&G declined to comment but the fund’s expertise in this area means that it is very likely to be involved in the bidding process.

Its M&G UK Companies Financing Fund set the template for the government scheme and has so far provided £830m to firms such as Barratt Developments, Wincanton and Taylor Wimpey – all public companies that either declined or could not raise funds in the traditional manner.

BlueBay is in the process of setting up an equivalent pan-European fund.