Britain is planning to set up a multi-billion pound investment fund to halt the drain of tech companies overseas, according to reports.
The Future Growth Fund will aim to pull in £50bn from UK pension funds to invest in fast-growing technology and biotech firms, according to Reuters.
Discussions are already underway with several FTSE 100 asset managers and insurers on the structure of the fund, according to the report with plans set to be in place possibly as early as the end of this year.
Ministers are said to have been jolted by the decision of UK semiconductor pioneer ARM’s decision to list in New York rather than London, which reflects struggling owner SoftBank’s need to get in as much cash as possible and the likelihood it will get a higher valuation in the US.
Nicholas Lyons, the City’s Lord Mayor, highlighted Canada’s Pension Plan Investment Board and AustraliaSuper funds as examples of funds to emulate, telling Reuters they were "eating our lunch".
Future Growth would act as a giant UK-focused venture capital fund, he said, specialising in backing unlisted start-ups before they hit public markets.
"There's a cliff edge at the moment between being unlisted and listed," Lyons told Reuters.
"At the moment these companies have to follow the money. If the money is in North America... they're going to North America."
However, pension funds expressed concern about being coerced into investing in this type of fund, saying it runs counter to how traditionally British investment has worked.
Lyons also suggested the UK should consider capital gains tax breaks to investors to improve backing for domestic stocks.
"If you want people to buy British, if you want to create more liquidity in the UK, that's a pretty easy way to do it," he said.