Northern Gritstone hits £312m amid pension fund boost

Northern Gritstone CEO Duncan Johnson

Northern Gritstone, the investment business focused on university spin-outs and IP-rich businesses in the North of England, has announced a final close of £312 million, anchored by investments from local authority pension funds.

More than £150 million of the funding commitments have been provided by South Yorkshire Pension Fund, West Yorkshire Pension Fund, Greater Manchester Pension Fund, Merseyside Pension Fund and East Riding Pension Fund.

These have been boosted by additional investments from the metro mayors for Greater Manchester, West Yorkshire and South Yorkshire, showing the strong local support for Northern Gritstone’s aim to create a hub of technology and innovation in the region.

Chaired by Jim O’Neill and led by CEO Duncan Johnson, Northern Gritstone has also secured the support of a large number of leading institutional investors including M&G, Columbia Threadneedle, British Patient Capital (part of the British Business Bank), Lansdowne Partners and property investor Bruntwood.

The announcement builds on the momentum that the company has built since its first close in May 2022, which has seen it make initial investments in early-stage businesses and expand its investment team under the leadership of chief investment officer Marion Bernard.

The company has begun to provide funding to some of the North of England’s science and innovation based businesses. It has already announced investments in 15 companies in the region across advanced materials, health technology and AI as part of deals that have contributed nearly £100 million in funding.

Northern Gritstone said it will continue to increase its investments in these areas, tapping into the pipeline of developments in the North of England that include some of the UK’s most exciting future science and technology-enabled businesses.

In its fundraising Northern Gritstone was advised by Lazard Venture and Growth Banking led by Garri Jones. Its legal advisers are Macfarlanes and Pinsent Masons.

Northern Gritstone chair Jim O’Neill said: “Our ability to raise funding on this scale highlights the support for the world-class science and innovation being developed in the North of England.

“Receiving the endorsements of asset managers, mayors and pension funds shows the broad appeal of Northern Gritstone’s offering.

“It is a show of faith in the potential for growth in the northern economy and a significant step in our development of a technology and innovation hub in the region.”

Northern Gritstone CEO Duncan Johnson said: “For too long, the North of England’s world-class research and innovation has not received the funding it deserves. Today’s announcement is a vote of confidence in both the region and our Profit with Purpose philosophy.

“Our deals have already generated nearly £100m of investment in the North, providing support to some of the country’s most promising businesses.

“Our investors’ backing will allow us to explore further opportunities across the wider northern venture ecosystem and stimulate growth and job creation in the region.”

Launched in July 2021 by the Universities of Leeds, Manchester and Sheffield, Northern Gritstone was founded with the philosophy of Profit with Purpose, combining strong returns for investors with wider positive, societal and economic impact, including supporting Levelling Up and high-skilled job creation in the North of England.

The company announced its first close of £215 million in May 2022 and secured a further capital commitment of £30 million from British Patient Capital in March 2023.

It is dedicated to financing companies in some of the UK’s fastest growing sectors such as advanced materials, energy, health technology and cognitive computation and has already made 15 investments in some of the UK’s most exciting future science and technology-enabled businesses.