The social enterprise bus operator the HCT Group has raised £10m from institutional investors and lenders in a deal it said says is the largest of its kind in the UK impact investment sector.
A range of financial instruments, including asset-backed facilities, cash-flow loans and a quasi-equity component, are included in the funding package, which HCT said gave the deal "a level of sophistication unseen before in this sector".
The deal includes a social impact incentive feature, which allows a reduction in the debt borrowing rate if HCT meets an agreed set of impact targets.
Investors include Big Issue Invest, Triodos Bank, the FSE Group, Social and Sustainable Capital, the City of London Corporation, the grant-maker the Esmée Fairbairn Foundation, the Phone Co-op and the bank HSBC.
HCT said that linking social performance with financial incentives was a powerful way of aligning the mission and purpose of both the investors and the social enterprise.
The organisation said it would use the investment to fund growth, purchase new vehicles and depots, improve infrastructure and deliver greater impact for the communities in which it operates. HCT will also be exploring private sector acquisitions and developing innovative partnerships with local authorities.
The impact investment bank ClearlySo, which helped to set up the deal, structured and facilitated the agreement of debt between investors.
HCT was also supported by the Investment and Contract Readiness Fund, which is managed by the social investment specialist the SIB Group and funded by the Cabinet Office and enables social ventures to build capacity to receive investment and bid for public service contracts.
HCT employs about 1,000 staff, has 10 depots spread across London, Yorkshire, the south west and the Channel Islands and a fleet of more than 500 vehicles. It had a turnover of £45.4m in 2014/15.
HCT raised £4m of capital in 2010, which HCT said allowed it to increase turnover by nearly £20m.
Dai Powell, chief executive of HCT Group, said: "In times of financial constraint, HCT has proven that high-impact and high-quality service delivery is possible, and that working with social enterprises should be a key part of any local authority’s commissioning strategy.
"It has been a pleasure working with ClearlySo and all our investors as together we redefine what social investment can deliver."