The British Business Bank recently reported a £122 million loss, attributed to short-term market downturns and valuation declines. Key insights from their announcement highlight the bank’s future plans, the economic context, and stakeholder perspectives.
- Chief Executive Louis Taylor attributes the loss to short-term falls in the book valuation of long-term investments.
- Despite the downturn, Taylor expressed optimism about the future of venture capital valuations.
- British Business Bank reported previous losses but is focused on long-term growth opportunities.
- The bank discussed new investment vehicles and reforms aimed at increasing its independence and impact.
The British Business Bank has reported a £122 million loss for the past financial year, a decline attributed to short-term falls in the book valuation of long-term investments, according to Chief Executive Louis Taylor. Taylor emphasised that these were unrealised losses rather than actual cash deficits, a sentiment he echoed by noting that “If you’d offered us these numbers last year, we would have taken them.”
This year’s loss follows a £135 million loss the previous financial year, a stark contrast to the £453 million profit recorded in 2022. The latter was driven by a pandemic-fuelled boom in the technology sector. Despite the cyclical nature of these figures, Taylor expressed optimism about the stabilisation of valuations in the venture capital sector.
David Hourican, the bank’s Chief Financial Officer, noted that the bank is currently not in the “harvesting period” for most of its investments. This indicates that the focus remains on long-term growth rather than immediate returns, a strategy that aims to more than double their investment returns over time.
In the previous year, the British Business Bank made funding commitments worth £2.3 billion, supporting debt and equity investments in small and medium-sized enterprises (SMEs). Despite recent on-paper losses, the bank is exploring a new investment vehicle involving pension funds aimed at supporting fast-growing private companies.
As the bank celebrates its tenth anniversary, its impact report highlights significant contributions, including the creation of nearly 40,000 jobs and an addition of £8.4 billion to the economy in 2023. Chairman Stephen Welton noted that the new investment vehicle aims to address the UK’s shortage of institutional investment by “crowding in private investment.”
The bank is also in discussions with government ministers to implement reforms that would increase its independence, allowing it to reinvest its generated returns. It’s important to note that the reported loss does not encompass the bank’s management of the government’s multibillion-pound pandemic finance programmes, as these are not recorded on its balance sheet.
Despite recent financial setbacks, the British Business Bank remains focused on long-term growth and innovative investment strategies to support the UK economy.
