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New global social impact fund vehicle targets institutional investors

Social Finance and Sonen Capital aim for $250m

A social impact fund of funds is currently being marketed to institutional investors by Social Finance, the UK group behind the Peterborough prison bond.

The Luxembourg-domiciled Global Social Impact Fund is being put together with San Francisco-based impact investing specialist Sonen Capital, which will act as the fund manager.

The target size for the fund is $250m (€191m) and Social Finance has already had several “firm commitments” from institutional investors, said sales director Martin Rich at an event organised by Luxembourg fund association ALFI.

The Grand Duchy is a natural choice of domicile as there’s no appropriate vehicle in the UK and Social Finance did not want to list the fund on an exchange, he added.
The fund will report to investors using the Global Impact Investing Network’s set of standardised reporting metrics, the Impact Reporting & Investment Standards (IRIS).
“We’re trying to tick as many boxes as we can for institutional investors,” Rich said. It is rare for an impact investment vehicle to be targeted at institutions, and Rich jokingly referred to it as the “call my bluff fund” –that’s to say it will gauge whether there is genuine institutional interest in social finance.

Social Finance already has a link with the pensions sector. Brian Bailey, who last year retired as Director of Pensions at the West Midlands Pension Fund, sits on its board. Another board member is David Blood, the former Goldman Sachs Asset Management CEO who co-founded Generation Investment Management with Al Gore.

Sonen, founded by Raúl Pomares and Stuart Davidson, specialises in multi-manager, multi-themed investment solutions via pooled vehicles, portfolio strategies and customized mandates.

Social Finance is perhaps best known for its groundbreaking Peterborough prison bond, where the aim is to reduce re-offending amongst male prisoners leaving the jail in eastern England.

But it also has a contract from Essex County Council to deliver a Social Impact Bond to help adolescents at risk. And in November last year it teamed up with FSE Fund Managers to launch what’s believed to be the first social impact venture capital trust (VCT) to raise up £20m for social enterprises and socially-motivated businesses.