The Ethical Property Company recently announced that it would produce its ninth equity share issue.
This is an astonishing achievement for a firm in impact investment and seems to have gone almost unnoticed by the normal sector commentators. Below I will explore why, but first it is worth discussing some of the things that are unusual about EPC, which in the interests of transparency I should point out is a client of ClearlySo.
Very few high-impact businesses do share issues. EPC has completed four since 2001 and has raised more than £12m since its first issue. These have occurred in the UK, where the company already has nearly 1,400 shareholders. The AIM-listed Good Energy Group is another firm that has been able to attract UK shareholders, as has Cafedirect, but they are still exceptions.
EPC has also expanded its model outside the UK. Four share issues have occurred in Europe (in France and Belgium), and the company has explored expansion opportunities in Australia. Such international expansion by UK impact-oriented firms is rare.
EPC's activities are straightforward: it purchases commercial office buildings and lets them to social change tenants. These tenants are charged rents below the market level and given more favourable and flexible terms. The firm runs the buildings in a more tenant-oriented fashion and endeavours to achieve high environmental standards.
Such premises are in high demand as charities and impact-oriented tenants see grant income squeezed, prompting a search for cost savings. As a result, demand for EPC's services is rising. Gross rental yields on the firm's properties might be slightly lower than commercial landlords, but EPC enjoys high occupancy rates, thereby boosting income.
The company's model has enabled it to be profitable every year since it was founded in 1998, and it has paid a dividend every year since 2001. It has increased its net asset value and just announced updated valuation figures as well as a potential unrealised gain it might achieve on one of its existing properties.
There are still obstacles, of course: shareholders are able to trade their shares through Ethex, but liquidity is limited - as a property company it suffered in the aftermath of the financial crisis. Its tenants also face uncertainty because of government cuts.
None of this explains the point I made at the outset, which is why the company's activities go relatively unnoticed - but three factors might be important.
First, the firm is based in Oxford. That's not far from the capital, but it is my contention that London-based firms get a disproportionate share of attention in the impact-investment sector. Second, the firm has been around for 17 years, and in my opinion there is a strong bias in the UK market towards businesses that are new and exciting. A track record of 17 years might be interesting, but EPC is hardly new. Finally, EPC has concentrated on providing services to clients rather than communicating what it hopes to achieve. Even in the impact-investment arena, we still live in a world where steak is less noticed than "sizzle".
Rodney Schwartz is chief executive of ClearlySo, which helps social entrepreneurs raise capital