Big Issue Invest announces plans to create a social bank

Finance | Vibeka Mair | 28 Mar 2011

Big Issue Invest has announced a long-term vision to become a social merchant bank providing a full range of finance for the social enterprise sector.

Nigel Kershaw, chief executive at Big Issue Invest, said: “We are building this institution through growth of our operations, partnerships, joint ventures and mergers.”

Big Issue Invest currently has a £7m loan fund which has invested in 27 social enterprises with measurable impact. In 2010, it launched a social enterprise investment fund to provide growth capital for social enterprises. As of June 2010 the fund had raised £3m and is currently fundraising to reach its target of £10m.

Other future plans at Big Issue Invest include a £35-50m Listed Fund that will invest in listed social businesses, in areas such as healthcare, education and training.

Kershaw (pictured) said: “Currently, the retail social investment space is captured by socially responsible investment (SRI) funds which have such a broad definition of socially responsible as to be practically meaningless. This fund will provide an investment opportunity for investors seeking true social value.”

Big Issue Invest is also developing the Contract Finance Fund, in partnership with PwC. The fund will provide capital to enable social enterprises and the voluntary sector to bid and deliver on public sector contracts.

Big Issue Invest also recently completed an alternative credit scoring study to assess the value of adding social-housing rent payment data to traditional credit-scoring models so as to increase low-income tenants' access to mainstream financial services. The study, carried out in partnership with housing associations and Experian, has demonstrated the predictive value of the data. It is now exploring developing a social business in this area.

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