Great news on the embrace of SIBs and more on Nandos DIB programme – interesting and encouraging all round…
Wall Street banks are eyeing a nascent market that improves their public image at a low risk and still offers them a reasonable return on capital.
The market is in so-called social-impact bonds, also known as pay-for-performance contracts, through which private capital can be funneled into philanthropic projects usually funded by governments and charities. The investors will receive a return based on whether a project saves public money by addressing the social ill it targets.
Goldman Sachs has launched two such bonds in the past 16 months – one for $9.6 million aimed at reducing recidivism among teenagers at New York’s notorious Rikers Island jail, and the other for almost $5 million, intended to help children from low-income families in Utah prepare for kindergarten. This month, Goldman also said it is raising a fund to allow its clients to make investments that have “measurable social impact,” including social-impact bonds.
Now Bank of America Corp is set to launch a social-impact-bond investing program, three sources familiar with the situation said. Details of the program are not known.
Other banks, such as JPMorgan Chase & Co, Deutsche Bank and Morgan Stanley, are keeping a close eye on these projects before getting involved, bank executives said. In some cases banks see the bonds, which were first launched in Peterborough, UK, as a product to sell to their wealth management clients, said George Overholser, chief executive officer of Third Sector Capital Partners, a nonprofit investment bank helping to structure various pay-for-performance deals.
Goldman Sachs Launches Social Impact Fund
Goldman Sachs has launched a $250 million social impact fund – one of the first US impact investing vehicles to be sponsored by a major financial institution.
The GS Social Impact Fund says it will pursue an investment strategy that addresses social challenges, provides investors with risk-adjusted financial returns, and mobilises new sources of private capital for social impact investing.
To be administered by the firm’s Urban Investment Group (UIG), GS says the new fund will be the first to enable wealthy individuals and companies to invest directly in projects that provide affordable housing, healthcare facilities, schools, and retail space; businesses and social enterprises that catalyze job creation and economic growth; and the delivery of social and educational services for low- and moderate-income communities.
“With insufficient public sector and philanthropic resources available to address chronic social challenges, private sector capital is emerging as a powerful tool to create economic opportunities for underserved communities,” the Goldman Sachs website said.
Nando’s And Coca-Cola To Launch A Development Impact Bond
Sir Ronald Cohen, outgoing chair of Big Society Capital, has said social investment is gaining traction internationally, with both Nando’s and Goldman Sachs launching new social investment products.
Speaking last week at Good Deals 2013, Cohen, who will step down from Big Society Capital in January, said there was growing evidence of international interest in social investment.