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Big Society Capital invests £3.1m in four social investment projects

Finance | Vibeka Mair | 28 Dec 2011

Big Society Capital has agreed, in principle, to invest £3.1m in four social investment projects, including the Social Stock Exchange.

The investments have been agreed by the Big Society Investment Fund, an interim committee set up to make investments on behalf of Big Society Capital, which is set to open early next year.

The four organisations which will benefit from the money once the contract has been signed are:

• FranchisingWorks, which will receive a £1m investment to help long-term unemployed people set up their own franchise businesses
• Triodos Bank, which will set up a new payment-by-results initiative using its £500,000 investment to improve educational, training and work outcomes for vulnerable young people in Merseyside
• Community Generation Fund, run by Finance South East, which will receive £750,000 to set up an initiative to create community-owned social enterprises within deprived communities. These will offer affordable, 'green' energy and reinvest profits in the neighbourhood
• The Social Stock Exchange, which will use its £850,000 investment to set up the world’s first stock exchange for social enterprises, to be located in London and improve access to capital for social entrepreneurs

It brings the total amount of investments by the Committee to five. Earlier this year, the Private Equity Foundation received the first investment of £1m. Some £500,000 of this will be used to fund a social impact bond, while the other £500,000 will be used to underwrite efforts to encourage a further £1m in investment into the social impact bond.

John Kingston, chair of the Investment Committee which agreed the funding, said:

“We’ve been impressed by the strength of the deal-flow under the Big Society Investment Fund. And I'm confident we'll be approving more investments in early 2012, to help build and grow the social investment market here in the UK.”

The Big Society Investment Fund will consider more proposals at its Investment Committee in February, where it hopes to make further investments. It is envisaged that this will be the final meeting of the Investment Committee as Big Society Capital is on target to be fully operational by the end of the first quarter of 2012.

Big Society Capital will be a ‘wholesaler’ to social investment intermediaries, and expects to be funded with £100m from dormant accounts and £50m from four high-street banks in its first year. Overall it expects to have £600m of committed funds - £400m from dormant accounts and £200m from high-street banks, over a four-year period. 

It has been recently granted state-aid exemption by the European Commission. The wait for authorisation from the Commission, which had to determine that it would not distort competition, had delayed its opening. It is still awaiting authorisation from the FSA.

An Investment Committee within the Big Lottery Fund, which holds the dormant accounts, has been making investments to social intermediaries on its behalf in the meantime.

Directory: Triodos Bank | Big Lottery Fund