New specialist sources of capital for the social investment market – April 2014

Practice area: Competition & Antitrust | Financial markets and Institutions
Client: Social Investment Research Council
Published: 14 February, 2014
Keywords: qualitative analysis stakeholder surveys and consultations

This study, conducted jointly with The Social Investment Consultancy, examines potential sources of capital for the social investment market among eight previously under-researched institutional investor groups.

It identifies two sets of opportunities for the UK’s growing investment market:

–  risk finance capital to support UK social sector organisations, estimated at circa £500m; and

–  a separate, multi-billion pound opportunity to invest in less risky, more established social industries – estimated as the ‘next £5bn’ of investment capital, to help scale up and grow the market.

The research indicates that charities, corporations, housing associations and family offices – who are primarily motivated to create impact as an objective of their investment activities or approach to service delivery – are likely to be the prime providers of the next £500m in risk capital required.

The more established £5bn end of the market is likely to be supported by a pioneering group of local authority pension funds, who require large investment sizes and have created dedicated allocations to support social investments, as well as family offices and charitable endowments with capacity to consider larger investments in sectors that are close to their current areas of focus.

The research was commissioned by the Social Investment Research Council, which launched in October 2013, and is comprised of major research commissioners in the social sector: Big Lottery Fund, Big Society Capital, Citi, City of London Corporation and the Cabinet Office.