Schroders plans launch of first social impact investment trust

Schroders is fundraising for two potential investment trust launches: the Schroder BSC Social Impact Trust and the Schroder British Opportunities Trust. 

Schroders is preparing for the stock-market debut of what it says is the first social impact investment trust. 

The Schroder BSC Social Impact Trust plc will aim to deliver a measurable positive social impact, as well as producing long-term capital growth and income. It will invest in a portfolio of private market impact funds, co-investments alongside impact investors, and direct investments.

Investments will focus on three main themes: high impact housing, including affordable housing for vulnerable groups; debt for social enterprises, including charity bonds; and social outcomes contracts, where an external investor provides capital to an organisation to deliver a social outcome on behalf of a public sector body. It is aiming for an annual net asset value total return that is 2% ahead of inflation (consumer price index), averaged over a rolling three-to-five-year period. It anticipates a 1% to 2% annual dividend yield.

At IPO, the trust will seek to raise up to £100 million by issuing up to 100 million ordinary shares priced at 100p each. A placing programme will allow it to issue another 100 million shares within the next 12 months.

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A £15 billion market by 2025 

While Schroders is designated as Alternative Investment Fund Manager (AIFM), Big Society Capital (BSC) will act as delegated portfolio manager, responsible for investing the trust’s assets. 
 
Social impact investor Big Society Capital has a track record in delivering sustainable financial returns and positive impact on people’s lives in the UK, the trust’s board says. Partnering with Schroders will allow the trust to give shareholders diversified and liquid exposure to UK private market impact investments, democratising access to the asset class for private investors, it adds.

Schroders says the global social impact market has grown significantly since 2011, producing a compound annual growth rate of 25%, and is set to be a £10 billion to £15 billion market by 2025.

“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,” says trust chair Susannah Nicklin. “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.

“Schroder BSC Social Impact Trust will bring together a diverse team of investment professionals with experience in portfolio management, sustainability, impact investing, government policy and social enterprises. Our intention with this trust is to provide investors and the investment sector with a best-in-class impact trust.”

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Tackling social challenges

 Jeremy Rogers, chief investment officer at Big Society Capital, adds: “The current coronavirus pandemic is exacerbating many social challenges. Social impact investing can directly help the charities and social enterprises tackling these problems, for example, by enabling them to provide accommodation and support for those experiencing homelessness and survivors of domestic abuse.

“Now more than ever, investors want their investments to deliver significant local impact. This new trust gives investors the opportunity to access high impact investment solutions with diversified returns away from public markets.”

Schroders is also currently fundraising for another proposed investment trust launch. The Schroder British Opportunities Trust, which aims to invest in high-quality, small- and mid-sized UK companies, is aiming to list on the stock exchange by 1 December. Applications for its share offer close on Thursday 26 November.