Adam Kelly, managing director and co-head of funds at British Business Bank, said: “Under this new growth equity strategy, we can back more innovative businesses and crowd in further private capital.

“We are pleased to make this £60mn commitment to NorthEdge under the strategy, backing UK businesses with the finance they need to scale and stay in the UK.”

The growth equity strategy is expected to invest on a commercial basis across generalist and thematic strategies.

It said historically “limited UK-based institutional capital” was allocated to the asset class.

Chancellor of the exchequer, Rachel Reeves, said: “We are pulling every lever to boost growth — making record investment in our infrastructure and public services, unlocking opportunities for companies through major trade deals, and supporting innovative businesses to start, scale and stay in Britain through our modern industrial strategy.”

NorthEdge is a private equity firm in Manchester with a focus on backing businesses in the lower mid-market.

It has so far invested more than £780mn into 49 companies from four regionally-focused funds.

Fund IV enables NorthEdge to invest in more founder-led businesses and SMEs across the UK’s Nations and regions.

The fund will focus on technology, healthcare and business services, making investments of £8-£50mn for controlling or significant minority equity stakes to accelerate the scaling of portfolio businesses.

Lucie Mills, partner at NorthEdge said: “Our investment strategy has always been focussed on building businesses of national and international importance from the UK regions, so it is fantastic to have a leading UK institution backing a UK-focussed fund — reinforcing our shared commitment to driving growth across the Nations and regions of the UK.”

tara.o’connor@ft.com

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