Big Issue Invest SEIF

Report
Social Enterprise Northwest
Social Finance Fair
February 2014
Big Issue Invest
For social entrepreneurs – by social entrepreneurs
 Big Issue Invest was founded in 2005 as the social investment arm of The
Big Issue
 It provides a range of investment options, from debt to equity and quasiequity finance to social enterprises from £50,000 to £1 million
 Lending business:
 Loans from £50,000 to £250,000
 Typically up to ten years
 Over £20 million lent to 180 social enterprises with c. 3% loss rate
 June 2010 launched the BII Social Enterprise Investment Fund limited
partnership investment vehicle for ‘equity like’ risk capital finance
 £9.2 million raised from a diverse range of social impact investors
 Can invest from £100,000 to £1,000,000
BII – Approaches to investing
‘Conventional’ lending
Convince me that you can pay me back
Security – secondary source of repayment
‘Risk capital’ investing
Convincing case for growth
More intensive due diligence
More active involvement post-investment
Higher potential loss, higher potential return
Investment Targets
BII SEIF - Investment Targets
Social Impact
 Clearly identifiable, high social or environmental value creation
Growth Potential and Ambition
 Viable business model which is either scalable or replicable
People, Products and Projections
 Strong management team with proven capability to deliver
 High value-for-money product or service
 History of positive cash generation or a clear near term path to cash and
surplus generation
Example ‘patient capital’ investment
Sandwell Community Caring Trust
Total financing requirement: £4.25 million to acquire a newly built
residential care facility
Source of funds:
Senior secured debt (first mortgage, 75% LTV)
Unity Bank
£3,250,00 (83%)
Subordinated term loans (secondary security)
Consisting of:
Big Issue Invest
£725,000 (17%)
- Fixed rate term loan
- Term:
7 yrs, 4 yrs interest only
- Rate:
7.5% fixed
£362,500
- Revenue participation loan
£362,500
- Term:
7 yrs, bullet repayment
- Rate:
1.8% of the uplift in “Trading Income” from the base year, with annual cap
BII’s Impact Assessment Scorecard
Dimensions
1. Mission & Vision
Weight
Grade ranges
35%
91-100 Excellent Performance
2. Scale of impact
40%
81-90 Very Good Performance
71-80 Good Performance
3. Transparency
10%
55- 70 Low Performance
0-54 Inadequate Performance
4. Market transformation
15%
Investee Performance Metrics
 Agreed, not imposed (but required)
 Simple, verifiable
 Usually, 4-8 quantitative output measures
 Relevant to the business
 SROI if relevant and desirable
 Metrics + targets
 Targets reported quarterly, reviewed and reset annually
(concurrent with financial budgeting process)

Discuss progress with Boards and work to drive improvement
 Annual social impact report
Investee Performance Metrics (example)
Investee is on target, within a negative variance of 25%, to meet the following social performance targets
for the 12 month accounting period to 31 March 2012:
3.1.1
Health
600 service users with mental health problems demonstrate improved well-being and have
reduced dependency on state services;
3.1.2
Safety
150 service users with long-term mental health issues live independent of acute care;
60 service users who are homeless or have inadequate housing needs are re-housed;
45 families with children in care or at risk of going into care receive support;
50 victims of domestic violence receive support;
30 perpetrators of domestic violence are no longer considered a threat to their families;
30 children gain safe access to a non-resident parent; and
20 services users that have been offenders within the criminal justice system do not reoffend.
3.1.3
Inclusion:
300 service users for whom English is not their first language use Investee’s services.
3.1.4
Economic well-being:
100 service users become more economically independent or useful either through
employment or a return to work after sick leave.
Thank you!

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