Impact Finance Bulletin: Housing hots up for UK’s SASC with board expansion and £60m raise for dedicated fund

• UK: Housing hots up for SASC with board expansion and £58m raise for dedicated fund
• US: Turner Impact Capital closes $350m housing fund for squeezed teachers, nurses and more
• US: Veteran tech investor launches Engine No. 1 to ‘harness capitalism for positive change’
• Asia: IIX launches $27m bond to help women in Asia rebuild livelihoods post-Covid
• UK: Schroder BSC Investment Trust raises £75m from London IPO in impact investing first 
• UK: Pioneering ‘gender lens’ property fund targets £100m raise 
• UK: New pension fund-backed homelessness property fund from Resonance targets £100m raise 
• US: California-based REDF secures $2m loan to fund jobs-focused social enterprises
• Lebanon: Crisis impact fund signs first deal to help snack business survive
• UK: Big Society Capital’s first impact report in three years seeks to address communication weaknesses
• More impact finance news in brief

UK: Housing hots up for SASC with board expansion and £58m raise for dedicated fund

The Social and Sustainable Housing (SASH) fund has raised £58m in its latest funding round. SASH was launched last year by Social and Sustainable Capital (SASC) and provides flexible secured loans of between £2m and £5m to small and medium-sized charities with a strong track record in social housing management to purchase properties. 

Its target is to provide homes for 10,000 people who are homeless, or at risk of becoming so, while providing stable long-term returns for investors generated from the receipt of government-paid housing benefit.

The latest round included increased commitments from CCLA Investment Management, Big Society Capital, the Garfield Weston and Tudor Trust, as well as new investment from the Greater Manchester Combined Authority (GMCA), the Joseph Rowntree Foundation and the Virgin Money Foundation. 

• Read: Europe’s 'only specialist investor in impact investing firms' predicts multi-billion pound future for first social housing fund deal ​

Ben Rick, managing director of SASC, said increased stakes by existing investors was a “real endorsement” of the fund’s strategy. SASC was “really pleased”, he added, that the GMCA chose to invest, and hoped to attract more local authorities and other institutional asset managers, foundations and family offices to invest in the future.

Last month SASC also appointed two new housing experts as board members – Terrie Alafat, former CEO of the Chartered Institute of Housing and Caroline Pillay, a senior partner at Airey Miller and the founder and chair of the Councils Building Homes Forum.

There is a real and long-standing funding gap in supported housing - Caroline Pillay

“There is a real and long-standing funding gap in supported housing, and I am delighted that SASC is focused on addressing the problem,” Pillay said.

Since the appointments, SASH has invested £5m in Making Space, a UK charity headquartered in Warrington (north-west England) that provides supported housing for people with mental health problems, age-related issues and dementia. The loan will allow Making Space to buy 26 properties to grow the business and move away from rented properties into owned housing. This will increase its owned property portfolio by more than 40%. 

On 16 December, SASC also invested £950,000 from its Community Investment Fund into social enterprise The Big Life Company to enable it to buy 15 homes and expand its housing services for vulnerable adults in Liverpool. 

This week, SASC also announced a new renewables investment committee. It plans to target more investments in community renewable projects in 2021.

US: Turner Impact Capital closes $350m housing fund for squeezed teachers, nurses and more

Turner Impact Capital – one of the US’s largest real estate impact investment firms – has closed a $350m housing fund dedicated to keeping housing in urban areas affordable to people earning less than the area median income.

The Turner Multifamily Impact Fund II, the firm’s second affordable workforce housing fund, will enable the firm to buy and manage up to 10,000 housing units in order to maintain rent at affordable levels to residents who may earn too much to qualify for subsidised housing, but not enough to afford home ownership or luxury rental units. These include teachers, police officers and healthcare professionals.

Turner Impact Capital’s first workforce housing fund invested nearly $700m to acquire 7,840 housing units occupied by more than 14,000 residents. The firm says the second fund’s $350m of committed capital paves the way for $1.25bn in investment potential.

The closing of the second fund “demonstrates the success of the firm’s innovative housing strategy and its effectiveness serving US families burdened by a housing affordability gap that is worsening by the day,” the company said in a statement, adding that the economic impact of Covid-19 will worsen the housing crisis.

“While at the end of the day we know this health crisis will pass, the pandemic and resulting financial crisis have highlighted just how fragile our most vulnerable populations are to unforeseen emergencies and underscored the critical and growing demand for affordable workforce housing in the US,” CEO Bobby Turner said. 

The pandemic and resulting financial crisis have underscored the critical and growing demand for affordable workforce housing in the US -  Bobby Turner

US: Veteran tech investor launches Engine No. 1 to ‘harness capitalism for positive change’

Engine No.1, an impact investment firm aiming to deliver “long-term value through active ownership”, launched on 1 December. Founded by Chris James, who has invested in technology for more than three decades and co-founded one of the biggest tech hedge funds in the early 2000s, the San-Francisco-based firm will invest in public and private companies through multiple strategies. The firm is launching with $250m in capital, Reuters reported.

“Framing the debate as ‘shareholder capitalism versus stakeholder capitalism’ does both parties a disservice,” James said. “Over the long term, shareholder and stakeholder interests align, and companies that invest in their stakeholders are better, stronger companies as a result.” 

The seven-strong founding team also includes among others Jennifer Grancio, founder and former senior executive at BlackRock's iShares business, and board member of Ethic, a fintech company focused on sustainable investment; Charlie Penner, who most recently led impact investment as a partner at JANA Partners LLC; and Edward Sun and David Swift, previous employees at James’s former firm Partner Fund Management.

The new firm has already come up with unusual ways to drive change by challenging Exxon Mobil to improve its environmental impact. Engine No.1 bought 0.02% of the oil giant’s market capital, according to a report by CNBC, just enough to allow it to nominate four green-minded directors to Exxon’s board. While on its own the firm’s proposal doesn’t have much weight, it gained support from major shareholders and increased pressure on Exxon as a result.

Asia: Impact Investment Exchange launches $27m bond to help women in Asia rebuild livelihoods post-Covid

Singapore-based Impact Investment Exchange (IIX) has issued its US$27m Women’s Livelihood Bond 3 (WLB3), the third in the $150m WLB series of gender bonds aimed at creating sustainable livelihoods for more than 3 million women in developing countries.

WLB3 will be backing enterprises in India, Indonesia, Cambodia and the Philippines that are directly supporting women to respond to or recover from the economic effects of the pandemic.

Investors include American asset manager Nuveen and New Zealand-based fund manager Pathfinder NZ. IIX counts a number of private and public partners, including the United States Agency for International Development (USAID), law firm Latham & Watkins, Australian bank ANZ and the United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP).

Read the full story on Pioneers Post.

UK: Schroder BSC Investment Trust raises £75m from London IPO in impact investing first 

The Schroder BSC Social Impact Trust, created by Big Society Capital in partnership with  global investment manager Schroders, has raised gross proceeds of £75m from its IPO.

The trust will use part of the net proceeds to acquire seven assets from Big Society Capital, with the balance of the net proceeds to be invested in accordance with the company’s investment policy and/or used for working capital purposes.

The seven assets in the trust’s initial portfolio are listed in the prospectus published on 23 November as UK Affordable Housing Fund, Resonance Real Lettings Property Fund, Social and Sustainable Housing LP, Charity Bank Co-Investment Facility, Rathbones Charity Bond Portfolio, Bridges Evergreen Holdings and Bridges Social Outcome Funds II LP.

Schroders and BSC just managed to reach the lower end of their estimate – they had expected to to raise between £75m and £100m.

Read the full story on Pioneers Post.

UK: Pioneering ‘gender lens’ property fund targets £100m raise 

A £100m property fund, believed to be the world’s first with a specific gender focus, launched after two years in development.

The Women in Safe Homes (WISH) fund is a joint venture from UK impact investment firm Resonance and real estate manager Patron Capital, and was developed with expert organisations including Women’s Aid. 

It was first announced a year ago, and aims to solve the lack of affordable, safe and secure homes for women who are experiencing homelessness, have been involved with the criminal justice system, are survivors of domestic abuse or have other complex needs. 

The WISH fund plans to buy around 650 affordable homes across the UK and lease them to the women’s sector and homelessness charities which, in turn, will rent homes to women at risk of homelessness, with a secure tenancy. 

Read the full story on Pioneers Post.

UK: New pension fund-backed homelessness property fund from Resonance targets £100m raise 

Resonance has also launched a new homelessness property fund, scaling up ambitions almost four-fold compared to the fund’s predecessor, and marking a first in attracting a pension fund among its investors.

The £20m National Homelessness Property Fund 2 aims to grow to £100m over its lifetime and to provide around 870 affordable homes. Resonance’s first National Homelessness Property Fund, launched in December 2015, bought 229 properties and housed nearly 600 people.

The new fund will initially focus on Greater Manchester and will later expand nationally. The new fund will acquire properties and lease them to the housing sector and homelessness charities which, in turn, will rent to individuals and families at risk of homelessness, with a secure tenancy. 

Read the full story on Pioneers Post.

US: California-based REDF secures $2m loan to fund jobs-focused social enterprises

REDF’s Impact Investing Fund (RIIF) has closed its largest investment to date, a $2m loan from the Annie E. Casey Foundation to help it expand funding to social enterprises providing employment opportunities.

The investment will enable RIIF, a debt fund that provides loan capital and technical assistance to social enterprises focused on employment, to grow its lending to new regions, in particular the south and south-west of the US which have been historically underfunded. 

RIIF began as a lending programme of the California-based venture philanthropy organisation REDF (Roberts Enterprise Development Fund) in 2017 to provide financing for social enterprises that offer jobs and training to people who are experiencing barriers to employment such as severe mental illness, substance abuse problems or homelessness.  

Read the full story on Pioneers Post.

Lebanon: Crisis impact fund signs first deal to help snack business survive

Luxembourg-based Cedar Oxygen, a crisis response and impact fund established in May 2020 to provide short-term loans to Lebanese industrialists, has agreed its first loan, to the Lebanese Roasting Group Sal (Castania), a nuts and snacks manufacturing company. The funding will help the company maintain its supply chain and preserve its workforce, Peter Daniel, CEO of the Lebanese Roasting Group, said.

High levels of inflation and limited access to US dollars mean Lebanese industrialists need a new approach to find alternative capital from outside Lebanon, Cedar Oxygen said. Lebanese manufacturers and industrialists, both importers and exporters, face a US$2bn short term finance shortfall, according to the fund.

Cedar Oxygen, set up by Lebanese expat fintech entrepreneurs and international finance experts, received an initial $175m of funding from the Central Bank of Lebanon, and is now seeking further investment from international development finance institutions to help support the Lebanese economy while meeting ESG goals.

UK: Big Society Capital’s first impact report in three years seeks to address communication weaknesses

Big Society Capital published its impact report in December, outlining the latest data collected by BSC as well as 35 case studies showing the impact of social investment. The report also gives a broader update on what the social investment wholesaler has achieved, three years after its last impact report was published.

The  report aims to improve how BSC communicates with others, a weakness highlighted in the organisation’s first independent review in July 2020. Senior social impact director Philip Essl told Pioneers Post BSC had this recommendation “firmly in [its] sights”, adding: “The ambition is certainly to tell our story better.”

• Read: Big Society Capital CEO: 'I’m proud of our review performance – but it raised some important issues'

Not all were convinced: impact researcher Jess Daggers – a member of the Adebowale Commission on Social Investment – argued in a blog post that the report was a “missed opportunity” to explain why outcomes data were presented in some cases but not others, and said it gave “no indication of the kind of frameworks and data that BSC actually uses.” 

Several social investors also published impact reports in December:

• The Social Investment Business shares an overview of impact in 2019-2020, particularly since Covid-19. Among others SIB is managing the Resilience and Recovery Loan Fund, and by the end of 2020 expected to have assessed more than 3,300 applications, disbursed nearly £30m of grants, and invested over £15m – all in addition to what was planned pre-Covid. The report also provides data on the diversity of applicants to its new funds and programmes, plus data on its own diversity pay gap for the first time.
• Big Issue Invest, marking 10 years since the launch of its first fund, looks back at the 2019/20 financial year. It supported 160 investees with a total of £41.7m in this period; these social enterprises were able to provide services to over 1 million customers. In its portfolio, women-led organisations make up 69% of investees, and over 50% of leaders receiving investment have lived experience of social challenges.
• NatWest Social & Community Capital also marks an anniversary in its 2019-20 impact report – 20 years since its founding in 1999. In 2019 S&CC approved lending of over £2.3m to 12 enterprises (down from £3.8m in 2018), and issued seven special 20th anniversary grants of £20,000 each to social enterprises and community businesses.

Above: Okra Solar has received a $500,000 loan from Nexus for Development

More impact finance news in brief:

• Global: Okra Solar, a technology company that provides energy to isolated homes through a solar “smart grid” system has received a $500,000 loan from international nonprofit Nexus for Development to expand its activities in Southeast Asia, Africa and the Caribbean.
• Global: NESsT, with the support of the Climate and Land Use Alliance, is to invest in two conversation enterprises that provide livelihood opportunities to local communities while protecting the forest. NESsT will take an operational role in the two enterprises and help them to build business skills and source clients.
• US: Shareholder advocate As You Sow, together with a number of investors, filed shareholder resolutions with five major US banks (JPMorgan Chase, Wells Fargo, Bank of America, Goldman Sachs and Citigroup) urging them to take greater action against climate change.
• US: Cincinnati, Ohio-based Fifth Third Bank announced a total $2.8bn commitment to accelerate racial equity, equality and inclusion, including a $2.2bn in lending, $500m in investments, $60m in financial accessibility and $40m in philanthropy.
• US: Real estate firm Jonathan Rose Companies has closed on a $525m impact fund dedicated to acquiring and preserving affordable housing while protecting the environment and connecting communities.
• US/Global: The Skoll Foundation has granted $6m to the $50m Racial Equity Philanthropic Fund, launched by social enterprise accelerator Echoing Green in order to advance racial equity.
• Spain/Global: COFIDES, the Spanish development bank, has launched a €120m impact fund to finance small farmers in emerging markets, with funding from the EU, the Spanish Agency for International Development Cooperation and private investors via Caixa Bank.
• Singapore/India: Circulate Capital, a Singapore-based investment management company focussing on the circular economy, has invested US$19m in four companies that are using technology and innovation to reduce plastic waste in India.
• Belgium: Social purpose real estate company Inclusio started trading on Euronext Brussels on 10 December, raising €60m from its IPO.
• UK: Global investment manager Schroders and Civitas Investment Management announced the completion of the first five projects funded by their Social Supported Housing Fund. The fund aims to finance 2,000 homes in the UK for adults with severe learning disabilities and significant mental health conditions.
• UK: London fintech Updraft, an app designed to tackle spiralling escalating borrowing, raised £16m to help its members avoid unnecessary credit card and overdraft charges. 
• UK: Mayday Trust, Changing Lives, Homeless Network Scotland and Platfform have launched a new platform to explore new responses and better systems for those experiencing tough times across the UK, thanks to a £2.5m National Lottery grant.

Header image: Alby, a tenant from the Big Life Company, which provides housing services for vulnerable adults in Liverpool, and which recently secured investment from SASC.

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