The first social impact bond pilots by the Ministry of Justice look set to be oversubscribed with investors, according to Social Finance who is leading the £4.9m scheme.

The pilots are one of the first trials by the government to test ways of bringing private and social investment into the voluntary sector.

It will see a range of investors fund voluntary sector support for six years to around 3,000 prisoners in Peterborough, who have served less than 12 months of their sentences.

Financial returns to investors will be based on improved social outcomes. If the initiative reduces reoffending by 7.5 per cent or more compared with previous government initiatives, investors will receive a share of government savings. If the scheme achieves greater success, investors will receive an increasing return, up to a maximum of 13 per cent.

Social Finance, which is raising the £4.9m to fund the scheme, told Civil Society that it looked likely to be oversubscribed with investors.

Toby Eccles, development director at Social Finance, said: “We have got a formal agreement for over 80 per cent of the money, and in the pipeline remaining it is significantly over that 20 per cent.  We will have more money than the £4.9m we need and we want to build on that success and do other pilots around the country of the £5m - £10m size.”

Eccles said the majority of investors have been charitable foundations, or individual investors coming through foundations. There has been only one commercial interest, who is still considering whether to invest.