Social impact bond fund should give returns of 5% a year, says Antony Ross of Bridges Ventures

The Bridges Social Impact Bond Fund has closed to new investment after raising £25m since its launch last year; Ross, a partner, says the growth rate is encouraging

Antony Ross
Antony Ross

A fund that will invest in social impact bonds, set up by the fund manager Bridges Ventures, has closed to new investment after raising £25m.

The Bridges Social Impact Bond Fund was launched last year and raised an initial £14m to invest in social impact bonds that fund work in such areas as early intervention in education, employment, housing and care for vulnerable young people.

Bridges Ventures said the fund, which closed to investors at the end of July, had since raised an additional £11m, including investments from the European Investment Fund, the Great Manchester Pension Fund, the Merseyside Pension Fund, Deutsche Bank, the Prince of Wales's Charitable Foundation, the Trust for London and the Highwood Foundation.

The fund works by providing up-front investments of up to £3.5m through the bonds, which are then repaid, based on the results of the schemes the bonds are supporting.

The Bridges Social Impact Bond Fund has a 10-year fund life with a four-year investment period, and there are plans to invest in 10 to 15 opportunities.

Antony Ross, partner and head of social sector funds at Bridges Ventures, said he expected the fund, which was oversubscribed, to give investors a financial return of more than 5 per cent a year.

"Interest in the bonds is growing at quite a pace," he said. "It is an early-stage market, but the growth rate is very encouraging."

The bonds are financing mechanisms that seek non-government investment for social interventions. If the interventions are successful, the government commits to repaying and rewarding the investors. If a scheme is unsuccessful, investors will lose money.

Money from the Bridges Social Impact Bond Fund has so far been invested in two schemes: It’s All About Me, a programme developed by 18 voluntary adoption agencies that will support local authorities’ adoption services; and a scheme commissioned by Manchester City Council and run by Action for Children to fund multidimensional treatment foster care placements, which helps children with challenging behavioural problems or who have experienced multiple placement breakdowns.

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