Schroders' impact trust ponders second fundraise

Schroders' impact trust ponders second fundraise

The Schroders BSC Social Impact Trust is considering a further fundraise this year, less than twelve months after its IPO.

In its results published on the stock exchange this morning (October 26), the trust said there was “potential” for [a] further fundraise in 2021” to invest in a pipeline that can deliver “high social impact” in the UK alongside sustainable real returns. 

Susannah Nicklin, chairwoman of the trust’s board, said the funding gap of capital required to address a broad range of societal challenges continues to grow.

She said: “At the same time, new sustainable and creative solutions and enterprises are being developed. Therefore, we are confident that the pipeline of opportunities for the company to invest in will remain robust.”

The trust listed in December 2020 raising £75m, though this fell short of its £100m target. 

It was the first London-listed investment trust with the objective to deliver measurable positive social impact alongside long-term capital growth and income.

The trust focuses on high impact housing, debt for social enterprises and social outcomes contracts.

As at June 30, the trust had deployed two third of its £75m IPO funds into 23 investments.

NAV total return for the period to June 30 was 6.1 per cent, which was ahead of its performance target of CPI plus 2 per cent and driven by capital gains, it said. 

The trust will pay a maiden dividend of 0.57p per share, representing a dividend yield of 0.55 per cent for the period from IPO to June 30.

Nicklin said the company intended to grow in time in order to increase the "magnitude" of its impact, increase liquidity in its shares and bring down costs for shareholders.

The trust’s portfolio managers said they continued to see strong potential next year.

“The social impact of the Covid-19 pandemic will take much longer to address than the immediate economic impact of the lockdown measures. 

“The UK government faces a tight fiscal situation...and we believe that this fiscal position will make social impact investments a continued important part of the solution, allowing the government to leverage outside capital and deliver services that can create government savings alongside significant social impact.”

They added wider markets have been affected this year by the increased uncertainty over inflation.

“We expect this will make the inflation-linked or inflation-correlated aspect of our approach an even more valuable part of investor portfolios in the coming period.”