Schroders is looking to raise £100m for the initial public offering of a new social impact investment trust.
The fund house announced today (November 23) it would float the trust, run by Schroders and impact investor Big Society Capital, at £1 a share.
It will be the first London-listed investment trust with the objective to deliver measurable positive social impact alongside long-term capital growth and income.
The trust will invest in a diversified portfolio of private market impact funds, co-investments alongside other impact investors, and direct investments to gain exposure to private market investments which fit the social impact agenda.
According to the trust, the partnership of Schroders and Big Society Capital — one of the UK’s top social impact investors with a track record of sustainable financial returns — would provide the company with “expert investment knowledge”.
The investment trust structure would also allow the vehicle to provide diversified and liquid exposure to private market impact investments in the UK, the company said.
The trust, which hopes to reach a size of between £300m and £500m over the next five years, aims for a net asset value total return of inflation plus 2 per cent, net of fees.
Susannah Nicklin, chairwoman of the company, said: "I am delighted that we are able to bring this social impact trust to the market at a time when the UK is facing some significant headwinds, particularly on social issues.
“This trust brings together the powerhouse of Schroders, a leading global asset manager, working alongside Big Society Capital, one of the UK's leading impact investors.”
Andy Howard, global head of sustainability at Schroders, said the connection between social impact and investment was “deepening and expanding” across financial markets.
He added that clients were looking for new ways to connect their investment goals and sustainability concerns to produce measurable social impact as well as financial returns, and that this trust provided such a solution.
Across a range of asset classes, the company will focus on three primary areas: high impact housing, debt for social enterprises and social outcomes contracts.
For housing, the trust will look to invest in property funds that either acquire or develop high quality affordable housing, from specialist housing for vulnerable groups to housing for low income renters.
Charity bonds, portfolios of secured loans and mezzanine debt funds will make up the debt part of the portfolio, while ‘social outcomes contracts’ include agreements whereby an external investor provides upfront capital to a delivery company and is paid in income from a public sector body.
As part of the set up, the investment trust will initially acquire £40m worth of seven assets — five impact funds and two co-investment debt portfolios — to make up the starting portfolio.
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