22OCT

Pension cash goes into PhysicsX round

3 min read

16:30UTC

British pension savings went into a British engineering-simulation company in a round priced by Singaporean state capital, the fourth investment from the British Growth Partnership.

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Key takeaway

The Bank joined a Temasek-led round using pension capital, its fourth British Growth Partnership position.

The British Business Bank put $25m into PhysicsX on 30 July, the fourth investment from British Growth Partnership Fund I since its £200m first close⁠¹. Temasek, Singapore's state investment company, led the round, with M&G Investments also participating. PhysicsX builds simulation software for engineers designing physical products, and has doubled recognised revenue and passed 300 staff.

PhysicsX has appeared in this topic before. Temasek led a $300m Series C at a $2.4bn valuation in June, with no UK state vehicle contributing a pound. This time the Bank joined through the British Growth Partnership, which pools pension money and invests it alongside the Bank's own balance sheet. The partnership's other three positions are Wayve, Elliptic and Draig Therapeutics, and none has appeared in this topic before. Ian Connatty, the partnership's managing partner and the Bank's deputy chief investment officer, describes the fund as "created to connect pension funds with the UK's fastest growing companies".

That description names a real constraint rather than a slogan. A pension scheme cannot underwrite a single venture position on its own, because the diligence cost per pound invested is prohibitive and the trustees end up carrying exposure they have no way to price. Buying into a pooled vehicle that does the diligence once, across a portfolio, converts an unmanageable risk into a line item a trustee board can sign off. Whether British schemes take that conversion at scale is the question this cheque tests; PhysicsX would have priced with or without a British name on the round.

Deep Analysis

In plain English

PhysicsX is a British engineering-software company. It just raised money in a round led by Temasek, the Singaporean government's investment arm, with the asset manager M&G also taking part. The interesting part is where a small piece of that money came from: the British Business Bank's British Growth Partnership, a fund built specifically to let British pension schemes put money into fast-growing UK companies without each pension fund having to do that difficult, expensive work itself. This is only the fourth company the Partnership has backed since it started with £200m. In effect, ordinary British pension savings went into a British company, in a funding round mostly priced by Singaporean state money, through a vehicle designed to make that kind of investment simpler for pension trustees.

What could happen next?

Meaning
The British Growth Partnership's co-investment model lets pension capital reach a $25m slice of a venture round it could not underwrite alone.
Risk
Four positions since a £200m first close is a slow deployment pace for a fund meant to demonstrate pension co-investment at scale.

Source Landscape

This story draws on neutral-leaning sources

PhysicsX's Series C itself was covered in this briefing series in June; what changed in this window is the pipe the British Business Bank used to join it, not the underlying deal.

A pension scheme cannot underwrite a single venture position directly, the diligence cost per pound invested is prohibitive and trustees would carry concentrated risk they cannot price, so the Partnership takes a limited-partner slot in a pooled vehicle that performs that diligence once and spreads it across several positions.

PhysicsX had already doubled recognised revenue and passed 300 staff before this round closed, meaning the $25m from the Partnership was not needed to make the round happen; it tests the co-investment mechanism rather than fills a funding gap.

Consensus view: Ian Connatty, managing partner of the British Growth Partnership and deputy chief investment officer of the British Business Bank, describes the fund as built to 'connect pension funds with the UK's fastest growing companies', and PhysicsX, its fourth position since a £200m first close, fits that stated mandate: Temasek led the round, with British public money co-investing alongside Singaporean state capital rather than replacing it.

Counter-view: No published critic has assessed whether the fund-of-funds model actually reaches pension savers at scale, rather than a small number of large institutional schemes able to commit to a pooled vehicle. The unattributed case for caution: four positions since a £200m first close, Wayve, Elliptic, Draig Therapeutics and now PhysicsX, is a slow deployment pace for a vehicle meant to prove a model other pension funds might replicate.

Key tension: Whether the British Growth Partnership's structure genuinely lowers the barrier for pension capital to reach venture-stage companies, or whether it mainly gives the Bank co-investment access to rounds it could not otherwise join.

Sources:British Business Bank

Mentions:British Business Bank →British Growth Partnership Fund I →PhysicsX →Temasek →Wayve →Elliptic →Singapore →

First Reported In

Update #14 · UKRI's sponsor department no longer exists

British Business Bank· 24 Aug 2026

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Causes and effects

Caused by

PhysicsX hits $2.4bn on Temasek cash

British Growth Partnership joined PhysicsX's existing Temasek-led capital structure four months after its $300m Series C.

Occurred 8 Jun 2026

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This Event

Pension cash goes into PhysicsX round

The British Growth Partnership is the mechanism by which UK pension schemes can hold venture positions they could never underwrite alone, and this cheque is its fourth live test.

Led to

British Business Bank writes £180m into six AI funds

The Bank's direct holdings include PhysicsX, backed through the British Growth Partnership in July.

Occurred 15 Oct 2026

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Different Perspectives

Abu Dhabi Investment Council

The Abu Dhabi Investment Council holds notes in Nscale's $3.36bn pre-IPO raise, beside Third Point, Apollo, Citadel and Nvidia. No British institution appears among the named holders of notes that convert into shares at Nscale's New York listing.

CDP Venture Capital

CDP Venture Capital, the venture arm of Italy's state lender, led TrueLayer's £20.4m round to expand Pay by Bank across Europe. A foreign state investor set the terms on a London fintech round in the same month the British Business Bank mostly followed.

EDBI

Singapore's state investor EDBI joined Universal Quantum's Series A of more than $100m, and the Sussex company is opening its first research centre outside Europe in Singapore. British state money is absent from the largest Series A by a UK quantum company.

Forbion

Forbion co-led OMass Therapeutics' $310m Series C with Bain Capital Life Sciences and Novo Holdings, while the British Business Bank and Syncona followed. The terms of the Oxford spinout's round were set by investors from three countries, none of them Britain.

British Business Bank

The Bank committed £180m to six AI funds on 15 October with no UK-deployment condition, yet led the first close of Microbiotica's £36m Series C. That lead, with Airtel Money choosing London for its £5.3bn debut, is the evidence that British money and markets still set some terms.

Stryker Corporation

Stryker called its roughly $400m CMR Surgical deal its entry into soft-tissue robotics, taking US sales rights for Versius, a board seat and an exclusive option over 100% of the company. The option lets Stryker choose whether and when a Cambridge robot maker becomes part of an American group.

Written with AI from Lowdown's published reporting. Not individually reviewed by an editor. Editorial standards.