The Social Stock Exchange, the UK impact investing initiative co-founded by Carbon Tracker’s Mark Campanale, is to launch a listing platform for social impact businesses next year.
It will be housed on listing facility ISDX (ICAP Securities and Derivatives Exchange), which is operated by broking firm ICAP and which hosts firms such as soccer club Arsenal Holdings and brewing firm Adnams.
Tomas Carruthers, chief executive of the Social Stock Exchange (SSE), said that it has decided to set up the platform as social impact businesses do not feel adequately served by the City of London.
He said it had a planned launch for next spring, and that SSE has partnered with Financial Conduct Authority-regulated crowd-funding provider Angels Den on the project.
SSE wants to offer a ‘cradle-to-scale’ solution for social impact businesses and is seeking to allow organisations ranging in size from small crowd-funding opportunities to much larger initial public offerings (IPOs).
The exchange grew out of a research report conducted by New Economics Foundation in 2006 after which co-founders Campanale and Pradeep Jethi – now chair of the exchange’s Admission Panel – set out to develop the infrastructure needed. It became operational in June 2013.Carruthers, the former CEO at online investment site Interactive Investor, took over as CEO in December last year. The exchange is chaired by Stephen Brenninkmeijer, the private investor who sits on the board of Swiss microfinance specialist responsAbility.
Carruthers said: “Investing for impact is increasingly seen as the way to make financial markets serve the needs of the public, rather than prey upon them. However until now retail investors have been reluctant to get involved as there has been no secondary market in many of these investments, making these investments unsuitable for many. The ability to readily buy and sell these holdings ensures investing for impact is no longer just the preserve of the wealthy.”
He said companies listed on the platform would have to prove social impact through a screening process by an independent admissions panel. All companies will also have to produce an annual impact report as a public document. Carruthers said it was already in talks with companies about listing.
Originally, the Social Stock Exchange was a type of verification platform for social impact businesses that screened organisations that were already listed on a stock exchange for social impact. Carruthers said since its launch, the social impact investing world had “moved on dramatically” and that the market for social finance was far greater.