Social impact investments, investments made with social benefit as well as financial profit as the bottom line, are a growth trend in Great Britain. The reason? The country’s austerity budget has resulted in significant cuts in government funding for social services. Government grants for social housing have shrunk from £3 billion to £500 million, according to The New York Times. Similar budget cuts have affected aid for the elderly and health care.
Cheyne Capital, a £6 billion, London hedge fund, is the most recent entity to fill the gap through social impact financing. Its Cheyne Social Property Impact Fund plans to buy property to rent to organizations that provide essential social services. The fund is raising £300 million, and aims at returns of 10 to 12 percent. Those returns are based on affordable rents and the fund’s ability to generate attractive debt financing.
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