Big Issue Invest: Social Impact Debt Fund IV
Overview
Fund IV is available to invest from its anticipated launch in mid-September 2023.
What?
The Fund will offer secured Unitranche loans for asset-backed growth and diversification and will target borrowers creating an impact in the Care, Housing, and Social Infrastructure sectors.
The Fund aims to provide large loans to proven impactful ventures, whilst not requiring borrowers to coordinate with complex syndicate structures that delay execution timelines and complicate capital structures.
- Anticipated loans will be fixed rate, sized between £1m and £4m with expected terms of 3 to 5 years.
- They plan to offer loans greater than £4m in due course.
Who?
Eligible borrowers will be established socially impactful organisations in the UK, with a history of revenue generation, profitability, and assets to support secured debt.
Social enterprises borrowing from the fund are expected to deploy the funding to improve their financial sustainability and scale up existing impact. Use of proceeds may include (but is not limited to): expansion of services, property refurbishment or acquisition, purchase of capital equipment, or improving cash profitability.
The Fund intends to lend in a wide range of geographies across the UK, with particular focus on areas of poverty that have a greater need for support and investment in respect of homelessness and affordable housing, care and hospice services, or improved social infrastructure.
What for?
The fund will focus on three core sectors :
- health and social care
- Poverty and poor health create a vicious cycle, with 1.6 million people in England aged 65 years and over with unmet care needs. Fund IV intends to partner with health enterprises that can provide innovative solutions to improve health outcomes and break this cycle.
- affordable housing
- Affordable housing is another critical area of focus for Fund IV, as there are currently 274,000 homeless individuals in UK, including 126,000 children. Currently, there are also over 1.2 million households on social housing waiting lists. Housing costs play a significant role in perpetuating poverty, with 46% of social renters experiencing the highest rate of poverty. Fund IV aims to support organisations that can provide affordable housing solutions and help alleviate homelessness.
- social infrastructure (for example co-working spaces, education & training, nurseries and arts organisations)
- The fund also recognises the importance of social infrastructure in addressing poverty and inequality. Communities suffering from high deprivation often lack public spaces, cultural engagement opportunities, and active populations. Fund IV seeks to lend to organisations that improve social infrastructure. Social infrastructure encompasses buildings and other assets in the community that are used to provide an impactful service. Examples of social infrastructure may include preschool nurseries, vocational education and training, specialist schools, arts and performance venues, or co-working spaces.
The fund seeks national exposure with an emphasis on areas of poverty and deprivation within the three core sectors.