MARKET REPORT: City duo team up to pump £20bn into UK startups

Even after Jeremy Hunt received a rebuke from his Labour successor Rachel Reeves this week, the former chancellor’s plan to increase investment in fast-growing private companies has been given a boost by the news that two FTSE 100 companies are teaming up to promote it.

Life insurer Phoenix Group and fund manager Schroders have agreed to launch an investment manager called Future Growth Capital (FGC) to advance the aims of Hunt’s Mansion House Compact and channel £20bn of pension cash into private markets.

This was a proposal made last summer by Hunt calling for major UK pension funds to invest 5 per cent of their cash in unlisted companies.

Phoenix said it is making this commitment by deploying an initial £1 billion now and up to £2.5 billion over three years, with the aim of deploying between £10 billion and £20 billion of investor funding over the next decade through the FGC joint venture.

Phoenix rose 0.9 percent, or 5 pence, to 547 pence and Schroders added 0.4 percent, or 1.4 pence, to 392.8 pence.

UK-listed stock indexes rose to two-month highs ahead of the Bank of England’s latest monetary policy decision, although the chances of a rate cut remain highly predictable.

The FTSE 100 gained 1.13 per cent, or 93.57 points, to 8,367.98, while the FTSE 250 gained 0.78 per cent, or 168.2 points, to 21,600.71.

Heavyweight commodity issues boosted blue chip gains.

Oil giants were in high demand as crude prices rose: BP rose 1.6%, or 7.2p, to 458.85p after a strong showing in its results. Shell, which publishes its first-half figures today, rose 2.7%, or 73.5p, to 2,840p.

Mining companies also traded higher as gold prices rose.

Endeavour Mining fell 0.6 percent, or 10 pence, to 1,730 pence despite saying it will pay a minimum of about 339 million pounds in dividends over the next two years and more if special payments and share buybacks are included.

The FTSE 100-listed miner reported a decline in first-half profit and gold output, but said it expects full-year production to be higher than last year.

Commodities aside, Metro Bank rose 30.1 percent, or 12.1 pence, to 52.3 pence as it forecast a return to profit in the fourth quarter after cost-saving measures during the year and a cash injection from the sale of its residential mortgage portfolio to NatWest (up 0.4 percent, or 1.4 pence, to 368.1 pence).

Investment group Rathbones rose 7.5 per cent, or 134 pence, to 1,924 pence as it posted a rise in first-half profit and funds under management and said it was ahead of its targets following a merger with Investec Wealth & Investment.

Housebuilder Taylor Wimpey added 0.5 percent, or 0.8 pence, to 159.35 pence after reporting underlying profits above expectations but made a higher provision for cladding fire safety of £88 million.

Ahead of more results from US tech giants, AIM-listed chip components firm IQE gained 6.3 per cent, or 1.85 pence, to 31.15 pence following news that it is planning an initial public offering (IPO) for its Taiwanese business on the Taiwan Stock Exchange.