Graphcore boss Nigel Toon has delivered a broadside to Britain’s pension funds as the chipmaker prepares to exit via a takeover by Japanese conglomerate SoftBank.
Toon called out UK pension funds’ risk-averse approach to investing in British growth companies, saying they “tend to focus on cost rather than growth”.
In comments published by The Telegraph, Toon stated: “We have about £4.6 trillion of capital managed in London as a result of pension funds and insurance. A tiny, tiny percentage of that goes into private companies today
He warned that pension funds are missing a “huge opportunity” in ignoring unquoted plcs and startups.
“Our pension funds tend to focus on cost, rather than on growth (and) performance,” said Toon.
“That creates its own issues in terms of ‘what’s the future value of your pension going forward?’ And how do we expose some appropriate portion to the high-growth opportunities that some of these scale-up opportunities represent?
“I think there’s a massive opportunity to do that, but there’s a lot of structural things still, I think that needs to be fixed.”
Graphcore, which ambitiously aims to compete with global chipmaking titans like Nvidia and AMD, is being acquired by SoftBank at a reported $600 million valuation. This falls far short of its $2.5 billion valuation in 2020.
Toon expressed frustration that the majority of investment into the business came from overseas players, including Microsoft and the Ontario Teachers’ Pension Plan.
One UK-based Graphcore investor, Molten Venture plc will realise a total return of $26 million following the sale to SoftBank. Molten first invested in Graphcore in 2016.