Louis Taylor

The bank experienced a £146m loss on its investment portfolio in the year to March, contrasted with a £619m gain in the preceding year.

Established in 2014, the BBB focuses on enhancing finance accessibility to smaller UK businesses by extending loans or acquiring ownership stakes. The organisation is heavily invested in venture capital funds offering financing to sectors like technology and life sciences. It also supervises financing for regional investments and start-ups.

Global tech valuations have suffered recently, causing apprehensions about elevated interest rates and economic growth. Louis Taylor, the CEO of BBB, foresees no immediate recovery, projecting a possible continuation of the unwinding of previously unrealised gains for the next 12-18 months.

MR Taylor said: “The British Business Bank has continued to build momentum in 2022/23, making a total of £1.6 billionn of commitments despite the challenging economic environment.

“As reported in our 2022/23 Annual Report and Accounts, there has been an expected drop in valuations across our portfolio, producing a £135.3m loss this year. Given the longer-term 10-year horizon for most of our investments we would expect an overall upward trajectory despite these in-year fluctuations.”

He continued: “After the pandemic, we have re-focused on the UK’s future economic growth as we deliver against our new strategic objectives from 2023/24. These are: driving sustainable growth, backing innovation, unlocking potential, and building the modern, green economy.

“We will continue to put our customers at the heart of everything we do, investing through the cycle to support the UK’s smaller businesses as they start up and grow.”

In contrast to the previous year’s 18.2%, the bank reported a diminished but ahead-of-target adjusted return of 6.5%, due to the fallen equity valuations. However, it did benefit from elevated interest rates on its loans. By the end of March, the BBB surpassed its £10.7bn target by supporting £12.4bn of finance to over 90,000 businesses.

Its core programmes, notably the Start-up Loans Programme and the Future Fund, have backed more than 100,000 businesses.

BBB, also the administrator for the government’s Covid-19 business support schemes, has been scrutinised over its role. By June, the government had paid £6.9bn to commercial lenders, covering losses from the “bounce back” loans, which were fully backed by a government guarantee. Ms Taylor clarified that recovery of funds, whether due to fraud or credit losses, is a focus, but since the loans were commercial and guaranteed by the government, they did not impact BBB’s balance sheet.

Lord Smith of Kelvin, chair of BBB, said: “There can be no doubt that the prevailing market conditions during 2022/23 have been both demanding and extraordinary.

“Our role, as the UK’s economic development bank, is especially important at the more difficult points of the economic cycle and this is why we have continued to invest during the last year. In doing so, we have built further our support for our ultimate end-customers – the UK’s smaller businesses.”