The Social Stock Exchange

Transcription

1 The Social Stock Exchange building a social capital market Mark Campanale Canterbury Social Banking Summer School July 2011

2 Introduction: the SSE Thursday, May 19,

3 The Social Stock Exchange A platform that allows trading of securities in social enterprises on a Financial Services Authority regulated stock exchange Designed to provide global social businesses with access to equity risk capital Core focus are for-profit social purpose businesses Market aligns capital from mission-aligned investors who value social outputs alongside profit Market mechanism that provides price discovery as well as valuation and trading of shares and, in particular, an entry and exit route for investors social investments Allows intermediaries to create investment products that bring social investors together with social businesses Enshrines social mission into heart of both the exchange and enterprise Thursday, May 19,

4 Helping to solve some of the challenges for the impact investing industry Thursday, May 19,

5 Creating a Social Capital Market It is now beyond urgent that we create a new social financial services sector Bill Drayton, Ashoka Translation issue do current markets meet the needs of social enterprises? Search: Can social investors easily find social investments? Regulatory framework: Is it favourable to social investors and social enterprises? Connecting: Is better sign-posting required? Rockefeller Foundation funds research into a Social Stock Exchange Thursday, May 19,

6 Addressing the Equity Finance Gap Social enterprises are likely to require equity finance as they evolve Grant Venture philanthropy Patient capital Bank loan Quasi equity Social equity offering There is a lot of seed capital available, angel-equivalent, for social entrepreneurs. But there is not a lot of later-stage funding available to take social entrepreneurs to scale. There a huge gap in the social capital market that s preventing many of the best models from replicating and fulfilling their potential. Linda Rottenberg, Endeavour Global, (Skoll Foundation/Sustainability 2007) Thursday, May 19,

7 The challenge for the sector Lack of capital routes for expansion or exit? Thursday, May 19,

8 Why will a Social Stock Exchange help? Thursday, May 19,

9 Improve visibility of deals for impact investors 1. Improve visibility of social businesses reduces cost of search 2. Provides daily mark-to-market pricing allowing portfolio management and chances for liquidity 3. Lowers financial and management due diligence costs regulated financial disclosures and adherence to City Codes 4. Lowers social due diligence costs adoption of social impact standards 5. Facilitates impact investing for family offices and foundations 6. Permits easier and targeted coverage by equity analysts interested in the sector, driving down transactions costs for all including corporate brokers, market-makers and social impact investors Thursday, May 19,

10 Democratising impact investing 1. Impact investing need not be the preserve of private equity or professional investors via private equity funds (which dominate the sector) 2. Regulated public stock market allows for retail investors to participate in impact investing: both HNWI and Joe Public together 3. RIE status allows pension funds to conduct impact investing 4. Third Sector workers can invest via their occupational (and/ or private) pensions in Third Sector companies 5. Immediate liquidity and daily mark-to-market pricing allows mutual funds and pension accounts to be created for sale to the general public Thursday, May 19,

11 Fertilizing the sector s ecosystem 1. Promotes recognised standards that establish a business as being a social enterprise: BCorps, member of SEC, SE Mark, CIC status, IPS, L3Cs 2. Promotes social impact performance and measures using standard, approved models: UKSROI, GIIRS / IRIS, NPC 3. Promotes capacity-building intermediaries : social investment banks social equity research and ratings agencies bespoke corporate advisory investment readiness services for the sector 4. Stimulates Government changes to policy and practice towards the sector (taxation, procurement, etc) Thursday, May 19,

12 Businesses likely to gain access to a Social Stock Exchange Thursday, May 19,

13 SSE: Admissions Summary A robust principles-led admissions criteria has been developed that involves: Social businesses demonstrate address key social impact An issuer s sponsorship on the exchange by a Social Nominated Advisor - NOMAD A social audit as an addendum to the Prospectus Vetting by an admissions panel Ongoing disclosure obligations relating to the issuer s social impacts Social Key Performance Indicators (KPI s). Thursday, May 19,

14 The Social Stock Exchange: a capital market that supports the social business sector Social Stock Exchange Thursday, May 19,

15 The Social Stock Exchange Summary of objectives Deliver an FSA regulated and duly authorised investment market place Explicitly reflect the social mission of enterprises, whilst being comfortable to the needs of investors Signpost social investors to social enterprises, enabling equity capital to be raised Capital market that serves the sector Thursday, May 19,

16 Contacts: Mark Campanale Pradeep Jethi James Perry