CAN announces new £50m social investment fund
Social enterprise support organisation CAN has announced its intention to build a major new fund intended to take social ventures on a journey that will mirror its own growth.
Six years ago CAN identified a cashflow benefit to its own business by purchasing, rather than leasing office space. The organisation borrowed £18.5m and started buying property. Five buildings later (four of which are in London’s central zone), it has seen the value of those purchases rise to £39m.
CAN now intends to pass on the good fortune accrued by this sage speculation to social ventures who wish to purchase their own assets. Funds will only be available for buying buildings. CEO Andrew Croft told us: “We know, from having walked the walk ourselves with no assets and a relatively unstable income flow, having an asset provides sustainability, you can focus on the core mission knowing you can pay your bills and it gives you choices as well as balance sheet strength. We see this as being key to the long-term sustainability of organisations.”
As well as being able to accommodate its own staff without renting, CAN offers subsidised office space to social ventures through the CAN Mezzanine arm of the business. Its branding makes plain the intention of the organisation: growing social business. CAN’s stated vision is of a social economy buoyed by a thriving social enterprise market. The other arm of the business, CAN Invest, provides finance by acting as a social investor.
The current strength of its portfolio has also resulted in some good fortune for many of the social ventures that are CAN's tenants. Rents have risen 70% in one of the areas in which CAN used to lease office space. Says Croft: “If we didn’t own that building now we would have been 'gentrified out' of that location while organisations that lived with us would have been left without affordable office space in an area that needs the vital work and services they provide.”
Because CAN now has such a lot of equity in its buildings (around £24m), Croft says that the organisation intends to spend half of it growing CAN further and use the other half as a cornerstone of the fund with which to attract further investment: “We should be able to leverage £30m, possibly as much as £50m, to create a fund between the £40m and £60m mark,” he told Pioneers Post.
The intention is that funds will be available to social ventures by the Spring of 2017, with loans likely to be offered at a 6% interest rate. Croft says CAN is making the announcement now because the organisation wants to start having the conversations that will build the pipeline of investment capital for the fund. “We need to be having those conversations now if we are to have a credible pipeline of fund for third parties,” he said.
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