The social investor who doesn't sound like a banker

Nigel Kershaw
Nigel Kershaw

Nigel Kershaw is not what you expect of a social investment financier. For a start, his accent is more black cab driver than City banker. He also eschews much of the language used by financial types, preferring to talk about the people and organisations that have been helped rather than about impact statistics.

But as executive chair of the Big Issue Group, Kershaw is now at the helm of one of the UK's largest social investment funds. In January, Big Issue Invest, the investment arm of the socially responsible magazine publisher The Big Issue, announced that it had raised £21m through its Social Enterprise Investment Fund II. It raised this in less than nine months and hopes to raise a total of £30m by the end of the year. It will use this to invest between £50,000 and £3m each in social enterprises.

Kershaw, a printer by trade who joined The Big Issue in 1994, says SEIF II shows how much the social investment market has changed since it launched its first investment fund in 2009. It took three years to raise £9.2m for that fund. He says: "Investors on the whole didn't know what social investment was all about in 2009, and what we were doing in the sector wasn't widely known."

Seven years on, the social investment market is now much more developed, especially since the arrival of the government-backed social investment wholesaler Big Society Capital, which has contributed £15m to SEIF II. "I can't say it has been easy second time round, but it's a really different atmosphere," Kershaw says.

BII has already invested £5m of the funding from SEIF II, providing money to, among others, the nursery provider the London Early Years Foundation and the social care provider Care and Share Associates.

But given the sums Big Issue Invest has raised, Kershaw is surprisingly downbeat about the role of social investment. "In the end, social investors don't create one iota of social impact," he says. "Everything we do is about helping social enterprises on the front line to create an impact."

Some charities and social enterprises view social investment as little more than a new way for banks and other investors to make money out of the social sector. Kershaw says there is a danger that the social enterprise sector will be seen as just another asset class by investors, which is why he believes it is important for social enterprises such as BII to be lenders too, because they can recycle the money within the sector and prevent it "leaking out in dividends". But he says that if social enterprises can get better terms and conditions from private sector social investors, they should take their money instead. "I'm not going to say don't do it," he says.

Kershaw is also concerned about the influence some social investors are having on the direction of social enterprises. He says: "There are people out there who don't know what it's like to be on the front line tackling poverty, but who are deciding how people should be dealing with it."

Social investors have a duty to nurture social enterprises and should not be saddling them with loans that could threaten their viability, he says: "One of the responsibilities of investors is to make sure they're not driving the financial model at the expense of the social enterprise."

One example Kershaw is proud of is BII's investment in the social enterprises Beyond Food and Brigade. The former provides catering training to homeless people; Brigade, a London restaurant, offers them apprenticeships. At its recent third anniversary celebration, a former Brigade apprentice talked about how he went from being a homeless Big Issue seller to a sous-chef at a leading restaurant after being trained at Beyond Food and Brigade.

Kershaw says: "That's what social investment should look like when it really works."

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