A £12m investment from Big Society Capital has helped to launch the Cheyne Social Property Impact Fund, which will lend money to social sector organisations that deliver services including affordable housing and supported living.
Cheyne Capital Management, which is running the fund, said it believed the total worth of the fund could reach £300m, but would not disclose how much it currently held, nor the identity of other investors who had been involved in its launch. The fund will assist social organisations to invest in property to deliver various services.
The fund "will aim for a balanced approach to financial and social return, with a view to generating stable, long-term, inflation-linked returns while creating positive social outcomes", according to a BSC statement.
BSC said that the fund would help to reduce the sector’s reliance on government grants.
A spokeswoman for Cheyne Capital Management said no commitments had been finalised so far, but there was an "attractive pipeline" of possible future deals.
Nick O’Donohoe, chief executive of BSC, said: "The shortage of suitable accommodation for people on low incomes, or who need specialist housing, is an enormous challenge faced by many in the UK. This fund will enable charities and other organisations that address this need to access many more properties and deliver their specialist services."
Jonathan Lourie, chief executive of Cheyne Capital, said: "We believe the reduction in government grants and the altered market structure provide an opportunity for alternative investment managers such as Cheyne to enter the sector and to be providers of responsible private capital. Our investors share our conviction that financial and social returns are complementary and will lead to superior outcomes over the long term."
Alternative investment managers invest in assets other than stocks, bonds and cash.
BSC made investment commitments totalling £93m in 2013, bringing its total investments since its 2011 launch to £149.1m, according to its annual report.