Bid to build £1bn finance market

Ministers are being lobbied to create a single £1bn social investment market by combining the proposed new social investment bank with the sector infrastructure-building body Capacitybuilders and government loan fund Futurebuilders.

Bubb: powerful institution would 'inject capital into the sector'
Bubb: powerful institution would 'inject capital into the sector'

The proposal comes from Stephen Bubb, chair of Futurebuilders and leader of the chief executives body Acevo. The Government is believed to be interested, but cautious about the practicalities.

Sector investment experts were unwilling to comment while the Government's bill on unclaimed assets, which would determine funding for a social investment bank, is still going through Parliament.

But some commentators privately expressed doubts about whether a group of funders with different cultures and interests could be successfully put together as a single organisation.

The social investment and development bank proposed by Bubb would combine Futurebuilders' £215m funding with Capacitybuilders' £88.5m. It would then be topped up with unclaimed assets money, which the Government has tentatively earmarked for an investment wholesaler for the third sector.

"You have got to have a really powerful institution for injecting capital into the voluntary sector," Bubb told Third Sector. "Capacitybuilders would do the development side, Futurebuilders would manage the service delivery and obviously the investment element would be tendered."

The proposal for a social investment bank came from the Coalition on Unclaimed Assets, chaired by private equity entrepreneur Sir Ronald Cohen. One contender to run the bank would be Cohen's firm Social Finance, set up earlier this year to develop and research the coalition's proposals in more detail.

Bubb, who is also chair of the Adventure Capital Fund, which recently won the tender to run Futurebuilders, said that the ACF and Futurebuilders would consider either joining together with Social Finance or competing with it to manage the bank alone.

"If there was going to be a competition, and we were bidding and Sir Ronnie was bidding, we could do a joint bid or look around for other partners," Bubb said.

"Arguably, ACF has got more experience in day-to-day running of social investment than anyone else."

Bubb's idea for a funder-based institution differs from Cohen's proposal for a financial wholesaler, which would create a new market for recycling capital and give the sector access to private finance. Cohen's bank would also provide financial advice to existing sector financiers such as Charity Bank and Triodos.


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