Triodos Corporate Finance Presentation content 1. Triodos our - - PowerPoint PPT Presentation

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• 1. Triodos – our experience in the SIB market
• 2. The SIB market in the UK
• 3. Case study – Street Impact Limited (London)
• 4. Lessons learnt from early SIBs
• 5. What support is available
• 6. Potential investors in SIBs
• 7. What are investors looking for?
• 8. Getting something “off the ground”

Triodos Corporate Finance Presentation content

Triodos Bank is one of the world’s leading ethical banks – we operate across Europe and only support businesses and organisations which generate positive social or environmental impact. Our experience in the SIB market

• Advised on 2 SIBs – DWP Innovation Fund and GLA Rough Sleeping SIB
• Ongoing management contract with existing DWP Innovation Fund SIB
• Advised DCLG and Cabinet Office on the Fair Chance Fund
• Advisers to third sector clients in the MoJ Transforming Rehabilitation programme
• Currently working at early stage with range of potential commissioners

E3M – New Opportunities for Partnerships Triodos and our experience in the SIB market

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Centrally commissioned SIBs:

• DWP Innovation Fund – 10 SIBs targeting NEETs
• GLA – 2 SIBs targeting homelessness
• DCLG Fair Chance Fund likely to result in 5 – 10 SIBs nationwide targeted at young

homeless people

• DWP Youth Engagement Fund – likely to result in 4 – 8 SIBs nationwide targeted at younger

NEETs aged 14 – 17 Locally commissioned SIBs:

• MOJ Peterborough prison – 1 SIB (the first one) targeting reoffending
• Essex County Council and Manchester City Council – 2 SIBs targeting children in care

Alternative structure – provider initiated model:

• Nationwide adoption SIB (iaam – its all about me) – targeted at commissioners nationwide

targeted at vulnerable children

E3M – New Opportunities for Partnerships The SIB market in the UK

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SIB Example – Street Impact Limited GLA & St Mungo’s

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• 100% payment by results contracts are very high risk for investors and providers

to deal with.... and could be counter productive for a number of reasons

• Encourages investment in only those clients who will deliver positive paid outcomes, and
• High risk for investors = high financial return requirements = high bids for successful outcomes
• There is a limited (but growing) pool of potential investors for SIBs at the moment
• £2 - £3m financing is a large deal and syndication of investment is common
• Some useful learning in how to run a PBR tendering process - this is important to

encourage adviser and investor engagement

• Different investors have different views on how to manage these investments
• Importance of risk sharing by the provider (and commissioner)
• Some positive lessons as well.... flexibility, clarity as to tender and scoring

process, ability to listen to bidders and investors, consultation period, Q&A

E3M – New opportunities for partnerships Some important lessons from earliest SIBs in the market

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For Commissioners:

• Up to £150,000 of development funding through BLF’s Commissioning Better

Outcomes Fund –to help commissioners design a SIB proposition

• £60 million of “outcomes top up” funding from BLF’s Commissioning Better Outcomes

Fund and Cabinet Office’s Social Outcomes Fund

• SIB Centre of Excellence - template contracts, “How To” guides, data gathering

templates

• Cabinet Office – best practice support
• Growing pool of advisers and commissioners with experience in this space

For providers and intermediaries:

• Investment and Contract Readiness Fund (ICRF) – grant funding for advisory fees
• More funds (capital) in the market chasing good opportunities

E3M – New opportunities for partnerships What support is available?

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Institutional social investors:

• National and local social impact funds, Charitable trusts and foundations, Family
• ffices, Big Society Capital

Alternative investors (depending on risk profile):

• Housing Associations
• Local Authorities?
• Angel groups?
• Providers themselves – own resources
• Retail investors?

E3M – New opportunities for partnerships Potential investors in SIBs

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• Evidence based interventions
• Provider – management and operational track record (with that client group)
• Positive social impact (some more than others)
• Risk adjusted financial returns
• Governance, structure and board representation
• Contract management and reporting process
• Risk sharing – provider financial input (skin in the game)
• Straightforward investor engagement process
• Co-investors
• Tax relief

E3M – New opportunities for partnerships What are investors looking for?

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• Commissioner or provider - Identify a social problem area where there is a clear

indication of both cashable and long term savings (e.g. children in care, residential mental health care, homelessness etc)

• Activating the project– create working group, hire advisers, access BLF

development funding etc

• Feasibility study - identify both immediate (cashable) and long term cost of status

quo, calculate what can be paid for successful outcomes?

• Is an evidence based solution at hand or is there a need for innovation?
• Evaluate procurement requirements and plan the process
• Consider investor appetite and engagement
• Start with something of modest scale or go big?

E3M – New opportunities for partnerships Getting something “off the ground”

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Thank you Dan Hird 0117 9809588 dan.hird@triodos.co.uk www.triodos.co.uk

E3M – New opportunities for partnerships Contact details

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