HSBC invests £4m in Big Issue Invest social enterprise fund

Big Issue Invest has announced that its Social Enterprise Investment Fund has notched up a total of £8m capital thanks to £4.5m raised in its third funding round – including £4m from HSBC.

The £4m marks an important milestone for HSBC as it is one of the first investments the bank has made within the social enterprise space.

Richard Cole, Global Head of Principal Investments and Private Equity at HSBC, said:  ‘We believe that the Social Enterprise Investment Fund is an exciting and well executed initiative which will have an extremely positive impact on a number of UK-based social enterprise businesses. 

‘There is an important role for banks to play within this area which encompasses their own corporate sustainability agendas. As part of our own agenda HSBC is delighted to be part of this initiative as an investor and whilst a pilot initiative for us we hope that this could be the start of a number of investments HSBC makes in this area.’

Nigel Kershaw, CEO of Big Issue Invest, said: ‘We are delighted with the support we have received to date and in particular to have received this major investment from HSBC that takes us one step closer to achieving our target of £10m.’

The £8m of capital committed so far comprises initial investments from Deutsche Bank, The Esmée Fairbairn Foundation, the National Endowment for Science, Technology and the Arts (NESTA), the Ulster Community Investment Trust and Eric Lonergan, fund manager at M&G Investments.

Big Issue Invest (BII) – a subsidiary of The Big Issue – is now seeking to raise a further £2m to complete its £10m target by the final closing of March 2012.

The Fund is a close-ended limited partnership with Big Issue Social Investments Ltd, a wholly owned subsidiary of BII, as the general partner. CCLA is the FSA approved fund manager, with BII as the appointed representative responsible for all aspects of deal making.

To date, the fund has invested £1.1m in four social enterprises and has approved a further three investments worth £1.4m.

The fund aims to provide creatively structured, medium term growth capital to social enterprises that have the potential to have a significant social impact and provide a financial return target in excess of 5% to investors.

It targets social enterprises with an identifiable social or environmental impact that is profitable with a scalable or replicable business model led by a dedicated management team with proven capability to deliver.

Typical investments are likely to include innovative businesses that create jobs for the long-term unemployed, deliver much needed health services in deprived neighbourhoods and develop renewable energy in a way that maximises both environmental and local economic impacts.