Social and Sustainable Capital launches £20m fund

Written by Andrew Holt
26/02/14

Charities and social enterprises will be able to apply for loans and investments of up to £1million from a fund launched today by Social and Sustainable Capital, which is jointly financed by the Social Investment Business and Big Society Capital.

As it launched its first fund, Social and Sustainable Capital also announced a strategic partnership with the Social Investment Business, one of the UK’s leading social investors, with the aim of attracting new finance for charities and social enterprises from the private sector.

The Community Investment Fund will make loans and equity investments of £250,000 to £1million in community-based social enterprises that are improving the lives of local people, particularly the vulnerable and disadvantaged, providing local solutions to local needs, creating jobs and developing their local economy.

It expects to invest around £5 million a year, focusing on organisations providing health and social care, education, training and employment support, and children’s services across England.

The Social Investment Business and Big Society Capital have both committed £10 million to the fund, with initial contributions of £3 million each.

Social and Sustainable Capital, founded in late 2012, is authorised and regulated by the Financial Conduct Authority and set up as a social enterprise.

It aims to attract investors into funds that provide finance for charities and social enterprises by offering positive social impact alongside a financial return.

The Community Investment Fund will report on both the financial and social performance of its investments, demonstrating to investors that it is possible to make a positive impact on society and receive a financial return.

Social and Sustainable Capital was founded by Ben Rick, a former managing director at Bank of America Merrill Lynch, and Adam Knight, formerly a managing director at Goldman Sachs and Credit Suisse.

Ben Rick said: “We are delighted to announce the launch of The Community Investment Fund, responding to the specific requirements of charities and social enterprises working in this sector.

"The fund has been designed to allow for substantial individual investments into the best social organisations serving their communities.”

In addition to investing in The Community Investment Fund, The Social Investment Business has invested £500,000 into Social and Sustainable Capital to enable it to scale up its activities.

The Social Investment Business will receive 51% of all future profits from the partnership: both investments are through its parent charity the Adventure Capital Fund.

Sir Stephen Bubb, chair of the Social Investment Business, added: "As one of the country's leading social investors, with 10 years’ experience in the field, we know there is huge demand in charities and social enterprises for simple lending, secured and unsecured, but precious little supply of either. That needs to end if we are to grow our third sector.

“This new partnership with Social and Sustainable Capital will enable us to access new funds from the private sector.

"Their experience and credibility with financial institutions is a perfect fit with our track record of delivering affordable finance to charities and social enterprises."

Nick O’Donohoe, chief executive of Big Society Capital, added: “Our £10 million investment recognises the potential impact that this fund and partnership could have.

"Firstly, the Community Investment Fund will drive funding right to where it’s needed, empowering communities to both own and scale up positive impact for local beneficiary groups.

"Secondly, this strategic partnership is an important development for social investment, combining the promise and rigour of Social and Sustainable Capital with the extensive market experience of the Social Investment Business.”

Social and Sustainable Capital’s chairman is Nat Sloane, who co-founded Impetus Trust, the UK’s first venture philanthropy trust fund and is England chair of the Big Lottery Fund.

The Investment Committee is chaired by Helen Sinclair, who co-founded Matrix Private Equity, now Mobeus Equity Partners, a leading provider of finance to small businesses.

Nat Sloane added: ““The potential scale of private capital available to fund social investment is enormous and is important for the sector’s long-term growth. Social and Sustainable Capital aims to play a key role in unlocking commercial investment by offering vehicles which meet investor requirements and develop investor confidence.”

The partnership responds to strong growth in the social investment market.

Demand for finance from charities and social enterprises is expected to rise to up to a billion pounds by 2016.

However, social ventures find it hard to secure finance on the scale they need to achieve their ambitions, and this is preventing them from realising their full potential to create jobs and improve the services they offer.

The Social Investment Business has pioneered social investment in the UK. It has invested more than £340 million in over 1,200 charities and social enterprise over the last 10 years.

However, most of that money has come from the government and public sector.

The partnership with Social and Sustainable Capital marks its entry into the emerging market of raising social finance from private sector investors.




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