£800,000 boost to construction apprentice numbers

The social impact fund Impact Ventures UK has announced that its first investment, totaling £800,000, has been made to K10, a social enterprise that employs apprentices and places them in the London construction industry. 

The fund was set up by LGT Venture Philanthropy, the impact investing initiative of the Princely Family of Liechtenstein and Berenberg bank. 

Its first close was announced in December 2013 after it raised £20.8m from investors including the London Borough of Waltham Forest Pension Fund, Deutsche Bank via the DB Impact Investment Fund, and the Golden Bottle Trust. 

A cornerstone investment of £10m was made by social investment bank Big Society Capital. 

K10, which was recently rebranded from 'Reds10', was founded in 2010 and aims to address the declining number of apprentices working in the construction sector. It recruits and employs apprentices, then places them with host employers for their on-site training while also organising their college placements. Its fees, including apprentice wages, are paid by the host employers.  

IVUK’s investment in K10 coincides with the social enterprise’s recent appointment of Andrew Purvis as its new chief executive. He was previously managing director of Neal’s Yard Remedies, followed by a three-year stint as chief executive of the youth charity Fairbridge. 

Purvis said IVUK stood out from other social impact funds: “Its collaborative approach was a key differentiator because it means that we are not only able to access financial support and the experience of IVUK’s world class investment committee, but also networks and business mentoring opportunities,” he said.

In an interview with Pioneers Post, Purvis said the £800,000 funding would be used to help grow the social enterprise, which has a turnover of £2.5m. 

“We’re at about 187 apprentices today and we are looking to grow by 100 apprentices a year for the next two years,” he said. “It may well be that as we continue to grow we require more cash to make that happen. This might be a first step. A second step would be Impact Ventures becoming an equity participant. That’s going to really depend on how scalable our model is.”

He added that the investment was a three-year loan and that it would be paid back in tranches. 

Richard Brass, head of UK clients at Berenberg Private Banking and founder of IVUK, said it was delighted to make this first investment. “[K10] sits in the sweet spot: a well-managed, high quality social enterprise with a robust business plan that is competing within the broader business landscape, whilst meeting a real need and with the potential to grow and make a difference in the community,” he said.

Raf Goovaerts, partner and head of the UK investment team at LGT Venture Philanthropy, said that IVUK was on track to make its next investment in the second quarter of the year, and that it would invest in enterprises that created strong positive social impact for disadvantaged people and communities in the UK while also generating a financial return.

Asked how it would assess organisations it was considering for investment, Goovaerts said they would be evaluated against five main criteria: quality and experience of management, effectiveness of the solution, growth potential, efficiency of implementation and potential to create impact.
 

Photo credit: Kyle May