Finance: 'Social stock market' is mooted

Social enterprises should consider forming a UK social investment market to access capital for growth, according to a joint research project by CAF and the New Economics Foundation.

The report, Developing a Social Equity Capital Market 2006, examines why social enterprises are having difficulty accessing equity capital in the existing market, and whether a designated social stock exchange would be a better way of linking social businesses with like-minded investors.

It was launched at the London Stock Exchange on Monday by Sir Ronald Cohen, a venture capitalist and ally of Gordon Brown.

Mark Campanale, chair of the steering group for the report and a director of the UK Social Investment Forum, said the research was triggered by the lack of investment in social enterprises to date. "Six billion pounds is invested in ethical funds in the UK, but very little of this is invested in businesses that have a social dimension," he said.

"Why is this the case? Some of the bigger enterprises are beginning to talk to the ethical funds, but they are still not quite touching."

Campanale said some charities do fund social enterprises, but even these tend to put forward only small amounts of money, and these are donations from their philanthropic funds, not investments from their portfolios.

Those that do want to invest in emerging enterprises often have difficulty finding them. "Plenty of investors are looking for the opportunity to invest in social equity, but there needs to be better signposting," Campanale said.

But Jessica Brown, report author and project leader of access to finance at the New Economics Foundation, warned that such a market was not going to happen overnight.

"We are trying to be forward-looking - this is a model for discussion and debate," she said. "It is valuable for social enterprises to begin thinking about how they might finance themselves, and this is something that the social investment community should continue to consider."

KEY POINTS

- A report from CAF and the New Economics Foundation argues for a social investment market

- They believe this would link social enterprises with appropriate investors

- Of the £6bn invested in ethical funds in the UK, little is invested in social enterprises, according to the report's steering group - Such a market won't happen quickly, says the report's author.

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